What happened

Stock markets saw a bit of optimism last week, with the S&P 500 putting together a modest three-day rally. But after Tuesday's downturn, and today's even deeper downturn, it appears we'll have no such luck this week.

Certainly not for solar stocks. Tuesday, shares of solar panel maker SunPower (NASDAQ:SPWR) and solar installer Vivint Solar (NYSE:VSLR) suffered share price declines, while solar thin-film specialist First Solar (NASDAQ:FSLR) fell flat. Today, all three stocks are down sharply, with SunPower falling 5.9% as of 12:55 p.m. EDT, First Solar down 7.2%, and Vivint off 9.2%.

Diamond shaped solar farm in a field

An aerial view of a solar farm. Image source: Getty Images.

So what

There was no bad news directly affecting any of these three companies today. To the contrary, there's actually some good news: Today's edition of The Wall Street Journal notes that "investors hungry for low-risk, stable-yield opportunities are looking to wind and solar farms, which could give renewable energy projects a financial boost in coming months and years." This logically bodes well for solar stocks as well.  

Granted, the middle of a global pandemic that's bringing down the price of oil and making alternative energy sources less price-competitive might seem like a strange time to get excited about solar projects. But as the Journal points out, a similar dynamic was evident immediately following the 2008 financial crisis, "when investors seized on [solar and wind] projects as safe-harbor investments with yields in the mid-single-digit percentages."  

Now what

Probably, investors today are reacting more broadly to news about the coronavirus, which hit 887,000 cases and more than 44,000 deaths globally today. This is taking down a lot of stocks in Wednesday afternoon trading, and it's no surprise to see solar shares among them.

Moreover, while the Journal sees reasons for optimism about the solar industry, SunPower, Vivint, and First Solar do not currently generate any positive free cash flow whatsoever. If cash is coming in the form of new energy-farm projects in the future, that's well and good. In the meantime, though, these companies still need cash to survive today.

Until they prove that they can generate it, I expect their shares to remain vulnerable.