This past week First Solar (FSLR), one of the big players in the space, came out with earnings and guidance and was met with brokerage firm downgrades. This past weekend Barron's noted that First Solar "conceded that the strategy that it and other solar companies have been following is broken and that deep changes must be made to salvage the promise of renewable energy."
Another fundamental threat to the industry comes from Chinese solar companies and accusations that they are creating a supply glut which is hurting all competitors -- including Chinese companies themselves as most of those stocks are down 60% for the year, faring worse than the ETFs.
There could always be a "back from the dead" trade on these names and I would expect them to rally should the price of crude oil put in a repeat of 2008 when it went to almost $150 per barrel. The conflict here is investing with the heart vs. logical investing. A lot has to go right for these stocks to achieve the potential perceived in 2008 and that seems very unlikely.
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