Why Shares of First Solar Inc. Dropped 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 First Solar (NASDAQ: FSLR  ) fell as much as 14.7% today after the solar panel manufacturer reported earnings.

So what: Fourth-quarter revenue of $768 million was below expectations, while earnings per share of $0.89 fell a dime short of what analysts anticipated. To make matters worse, first-quarter guidance of $800 million-$900 million in revenue was at the low end of expectations and the EPS guidance of $0.50-$0.60 fell far short of the $0.84 estimate.  

Now what: Revenue and earnings can be lumpy based on when projects are finished and sold to investors, and some of the miss is explained by project delays. But the fact that First Solar missed full-year 2013 earnings expectations it set just two months before the final quarter ended is concerning. The company is in a tough strategic position given its low-efficiency modules and needs to turn new technology into commercial products soon to catch up to competitors. I don't think this is the end of First Solar, but there are better solar options for investors right now.

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