Why Trina Solar’s Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Trina Solar (NYSE: TSL  ) dropped as much as 10% today after reporting fourth-quarter earnings.

So what: Solar module shipments were up 9% to 415 MW in the quarter, which was above expectations, and this led to revenue of $302.7 million, above expectations of $271.2 million. The problem is that revenue was down 30.5% from a year ago and it still couldn't bring the company near a profit. Gross margin was just 1.9% and the company lost $1.23 per share, $0.43 worst than what Wall Street expected.  

Now what: There is no reason to be optimistic about the financial future of Chinese solar firms, including Trina Solar. The company isn't anywhere near a profit and debt continues to grow as it pays for its losses. I'm certainly not buying today and I would bail as quickly as I could if I were a shareholder.

Interested in more info on Trina Solar? Add it to your watchlist by clicking here.


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