Yingli Green Energy (NYSE:YGE), JA Solar (Nasdaq: JASO), LDK Solar (NYSE: LDK), and Renesola (NYSE: SOL) face huge hurdles as the demand for solar dwindles, and only being propped up by the Chinese government allows them to survive at this point.
There is little doubt these companies would have probably declared bankruptcy if they were based in the United States.
The problem is there is simply little demand from individuals for solar power, being the darling of government and politicians around the world, seeking to curry favor with a small but vocal minority opposing fossil fuels, even though there is no proof global warming is a fact.
Demand for solar from the largest markets, Germany, France and Spain, shrank in 2011, and has little chance of growing in 2012, as the sovereign debt crisis widens and deepens.
The question for the solar companies above are how long China will continue to underwrite their performance. While it's impossible to know what is really happening economically in China because of lack of dislosure, or in many cases, outright fraud, investing in these solar companies is highly risky, as it is with any solar firm.
Slowing demand is crushing margins and earnings, and with the probable continuation of a weak global economy, there is no way to be sure any government will continue to support the solar sector and the companies relying on that for survival.
Well then, what will happen if there will be no solar company existing on this planet?
ReplyDeleteThere is no proof what you are writing is the truth.
ReplyDeleteReally? No proof of global warming?
ReplyDeleteWhat a load of rubbish. On what basis you have on these companies going under the water.
ReplyDeletePlease educate yourself. climate.nasa.gov
ReplyDeleteClassic example of disinformation and conjecture of opinions to support a position against solar companies, especially Sino based companies on US exchanges.
ReplyDeleteHalf truths displayed to sway weaks hands, don't take the bait folks.
ReplyDeleteThis guy is writing something with no idea what rubbish it is. Atleast have a comon sens of in iddiot
ReplyDeleteI cannot understand why such as non-sense was allowed to evaluate solar energy stock. indeed, he is writing something with no idea what solar energy means to human being and to this planet.
ReplyDeleteThe only reason for dropping down price of these stocks is USA government's sanction against Chinese government's subsidiary on solar energy enterprises. But these companies had grown strong enough to survive this. I believe they will find the ways to coming up with high gasoline price and high inflation.
Solar is a long term play. You can believe it or not. As solar companies continue to consolidated their businesses and improve on the their operational cost in the near terms, the gross margins will eventually improve. For sure there will be some hiccups here and there along the way. But as the overall market continue to show signs of growth and strength, Government subsidies from the US, China and Europe will return to invest in the GREEN ENERGY. This is a tough business, only the strong balance sheet will survive this consolidation phase. But the ones that will survive this tough times, they will become stronger and profitable in the long term. Solar is definitely not going away anytime soon, just reorganizing and restructuring is needed. It is like the days of the cell phone service companies, there were just too many companies out there and not enough shares for everyone. My guess is there will be lots of mergers, consolidations and of course, there will bankruptcies in the near term as well. But truthfully, I am LONG SOLAR.
ReplyDeleteLONG JASO, WFR, FSLR, and YGE.
You know the article sucks balls when it says "there is no proof global warming is true". really? 97% of scientists say global warming is true, and that is no proof for you right wing loons?
ReplyDelete