Why Chinese Solar Got Crushed Today

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 solar stocks were down across the board today, but JA Solar (NASDAQ: JASO  ) led the way by falling as much as 12%. Trina Solar (NYSE: TSL  ) , LDK Solar (NASDAQOTH: LDKSY  ) , and Suntech Power (NASDAQOTH: STPFQ  ) also fell by as much as 10% as European tariffs have put a cloud over the industry.

So what: The big news was yesterday's announcement that Europe will impliment an 11.8% tariff on solar products from China, and if a long-term deal isn't reached between these two regions, these tariffs will increase to between 37.3% and 67.9% on Aug. 6, depending on the company.  

The news caused analysts at Goldman Sachs to downgrade shares of Trina Solar and JA Solar to sell.

Now what: Don't say you didn't see this coming. Two weeks ago, The Wall Street Journal reported that tariffs would hit Chinese solar manufacturers this month. I've been telling investors to avoid Chinese manufacturers, particularly those that are highly leveraged, in part because these companies are on the wrong side of the solar trade war. The U.S. and Europe are fighting back against massive subsidies given to the Chinese manufacturers, and this will only put more pressure on companies that can't make a profit.

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


Read/Post Comments (9) | Recommend This Article (0)

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  • Report this Comment On June 05, 2013, at 5:07 PM, Foolsspin wrote:

    The reason why they are down is from a 30 cent downgrade if you want to call it that?

    Goldman Sachs had a PT on JA of 4.50 Haha before JA reported earnings. New PT 4.20 but Why?

    The criminal Goldman wasn't prepared for a jump in JA's price passing $11.00 a share after ER problably got caught short.

    Now Goldman is trying to justify EU will have an impact when JA barely ships there & even though all Chinese Solars have been charging more for several months now for any solar products being shipped to Europe. In fact they have charged more than the 11% tariff. You can expect many to be more profitable in the coming months. I think this time Goldman wants to participate in further Gross Margins and Earnings Announcements with JASO

    Really Funny Goldman goes from 4.50 (after missing the $11.00 move) to 4.20!

    Sounds confusing and Dishonest to me.

    Most have learned not to listen to analysts and especially Goldman by now Motley.

  • Report this Comment On June 05, 2013, at 5:17 PM, dsong wrote:

    motley fool:

    This is a very shameful article that twist the fact.

    EU does not have any card in hand. 2/3 of EU members are against the tarrif. Even Gordon Johnson admitted today the China has up hand for further negotiation.

    US Obama is very likely to lift the tarrif on China Solars this Friday with Mr.Xi. If so, the China solars will explode thereafter.

    Finally, Fslr, spwr all down heavy.

  • Report this Comment On June 05, 2013, at 5:58 PM, Foolsspin wrote:

    dsong I think there are efforts in place to lift the US tariffs, know about the meeting. You'll like this from CNBC http://video.cnbc.com/gallery/?play=1&video=3000173648#e...

  • Report this Comment On June 05, 2013, at 5:58 PM, Foolsspin wrote:

    Fast forward to 8.50 on the Video Talking about Solar is a Buy Buy Buy!

  • Report this Comment On June 05, 2013, at 6:37 PM, Foolsspin wrote:

    http://video.cnbc.com/gallery/?play=1&video=3000173648

    Todays market wrap at 4:00 pm comments made by abot money manager. The place to put your money is in alternative energy and solar stocks. EU is short lived and these stocks have lots of room to run.

  • Report this Comment On June 05, 2013, at 6:38 PM, stupidmotley wrote:

    Why does Goldman target out JASO and TSL???...why not also JKS, CSIQ etc??? It's because they pump JKS, FSLR, SCTY while constantly bash JASO and TSL even as they are doing better and Goldman missed the mark big time on the positive earnings on JASO...they got burnt and they are hoping to pull down again before next rise....JKS hasn't materialized like JASO and TSL...ha...funny what they get away with!

  • Report this Comment On June 05, 2013, at 11:18 PM, mrmrs wrote:

    Beware of "FOOLSSPIN" comments. He is known as the MAGGOT on the JASO - Yahoo message board.

    BUSTED U on here MAGGOT !!!

    He insults everyone that does NOT agree with his position on JASO and reports every post as SPAM or complains to yahoo to get it removed if it is not PRO JASO.

    Hw ill complain to Motley to remove this comment also.

    he uses over 100 IDs:

    raretobeh, wolfdoggy12, williamdavis721, pierp28, pierpinsides, grandsfive, betyacandance and many more.

    He has pumped JASO for the last 2 years form its high all the way down to the lows. He would sell his mother if he thought it could help JASo trade up.

  • Report this Comment On June 07, 2013, at 11:22 AM, Clearer wrote:

    motley fool & Travis Hoium:

    This article is very ignorant and shameful that twist the fact. You do not respect the fact of progressing to the Green Environment over the world nowadays, but just twist the fact. That's really ignorant and shameful!

  • Report this Comment On June 17, 2013, at 1:48 PM, sonofTesla wrote:
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