The Importance Of First Solar

First Solar (FSLR) turned in an amazing quarter this week, with its year over year profit tripling, and more impressively, its quarter over quarter profit up 25%.

The importance of First Solar’s quarter is evident in the stock chart below. We chose a handful of solar companies to include in the chart: SunPower (SPWRA), Suntech (STP), Yingli (YGE), Canadian Solar (CSIQ) and the Claymore-MAC Solar ETF (TAN). They all shot up on Thursday after First Solar reported, outperforming the broader market.

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The only company that didn’t finish way up for the week that we’ve included on this chart was Evergreen Solar (ESLR), who had the unfortunate distinction of reporting its earnings the day after First Solar. Evergreen turned in a 40 cents a share loss. Evergreen’s performance is what can be expected for most solar companies. SunPower, the week before, turned in a 6 cents a share loss. Akeena Solar also turned in a loss this week.

First Solar is the outlier, but it can drive the market. If it didn’t turn in quarter after quarter of stellar results, solar stocks would likely be in a world of hurt right now.

There’s another reason that First Solar’s killer quarter is important, and it’s not in the stock chart. It’s in the private markets that are home to startups.The venture backed IPO market is dead. A company like First Solar helps to combat this phenomenon, particularly for clean tech startups.

Its success proves that a well run solar company can turn in quarter after quarter of profits, even if solar is just fraction of the energy equation in the U.S. The more “First Solars” that exist, more funding goes to startups, which creates new technologies, innovations, entrepreneurs, and all the wonderful things we love about capitalism.

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