What happened 

Shares of Canadian Solar (NASDAQ:CSIQ) fell as much as 18.7% in trading Thursday after the company reported fourth-quarter 2018 earnings. At 3:15 p.m. EDT, shares were still down 18.8% on the day. 

So what

Fourth-quarter results weren't particularly startling for Canadian Solar. Module shipments were 1.95 gigawatts (GW) versus guidance of 1.9 GW to 1.95 GW. Revenue was $901 million and earnings were $99.5 million, or $1.61 per share on a non-GAAP basis. 

Solar farm with a sunset in the background.

Image source: Getty Images.

Where investors really saw weakness was in guidance for 2019. Management said it expects to ship 1.3 GW to 1.4 GW in the first quarter (which is almost over) and report $450 million to $480 million of revenue, and gross margin of 16% to 18%. For the full year, the company expects 7.4 GW to 7.8 GW of shipments and $3.5 billion to $3.8 billion of revenue. Net income is also expected to be down from the $237.1 million reported in 2018. For context, analysts were expecting $3.94 billion in revenue. 

Check out the latest earnings call transcript for Canadian Solar.

Now what

Canadian Solar is up against falling prices for solar panels, which is hurting both revenue and income. But that's a long-term trend solar companies have been dealing with for a decade. Investors were just surprised at how quickly the decline is going to hit business, and that's why shares are down big today. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.