Not too long ago solar stocks were a short seller’s dream… and with good reason… as companies struggled to be profitable without the help of government subsidies.
The problem: photovoltatic cell prices were too high, but the situation has changed… as manufacturing capacity has been rapidly developed over the past few years… prices of cells have fallen precipitously (see chart below).
Being a former bear in solar stocks myself… I am beginning to formulate a new opinion on the industry.
Solar energy currently represents only .25% of the world’s electricity supply… and with cell prices where they are today… sunny geographies like California, have seen economical advantages in using solar, which can finally compete with traditional power without government subsidies.
There are still many short sellers residing in solar stocks… for instance First Solar (FSLR) has over 40% of its shares shorted.
Looking at its monthly chart… I would be scared holding shares short right now.