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Solar's Short Squeeze Days Are Numbered

Revenue in 2013 increased as a result of moving part of the large Desert Sunlight project from 2014 to 2013. Wall Street is a big fan of getting paid today instead of tomorrow.

For tomorrow, actually 2015, investors clearly keyed in on the potential earnings of up to $6 a share. The guidance given is $4-$6 a share, but who is going to remember in 2015, right? You can drive a steamship full of Chinese subsidized solar panels through that figure.

In 2013, analysts have an earnings estimate of $3.46 a share on $3.15 billion in sales. This is where we find the market moving difference. First Solar is reporting guidance of $2.5-$4 earnings a share on $3.5-$4 billion in sales.

After reading the increase in guidance and profit for 2013, you may be tempted to buy into the long thesis and say "this time is different and the price spike is real." But remember, "what the large print gives, the small print takes away".

The difference in 2013 guidance is more a result of moving revenue and profits from 2014 to 2013 than an increase in overall revenue and income. The Street will quickly figure this out, and the time to own First Solar is after, not before.

There is an old saying on Wall Street, "buy when there is blood in the streets." This is equally true for short selling, and we all know the blood is flowing after today.

Disclosure: The author doesn't hold a position in any stock mentioned.

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