What happened 

Shares of FTC Solar (Nasdaq: FTCI) dropped as much as 23.4% in trading on Wednesday, as investors began to worry more about inflation. At 2 p.m. EDT, shares of this solar energy stock were still down 22.6% for the day. 

So what

FTC Solar went public late last month at $13 per share, but that price hasn't held long for investors. Shares hit a low of $8.96 per share today and are bouncing near that low as I'm writing. 

Large solar array on a hill.

Image source: Getty Images.

The reason shares are down big today is because investors are worried about inflation and rising interest rates. Since the start of the year, the 10-year Treasury rate, a proxy for interest rates more broadly, has risen from 0.75% to 1.69%, including a 0.066% increase today. That's a big jump in just a few months and is hitting solar stocks hard today, including FTC Solar.

It hasn't helped that costs for steel and freight are hurting competitors' margins, which could mean lower margins for FTC Solar, as well. 

Now what

Solar developers are very sensitive to rising interest rates because projects have high upfront costs and generate revenue for decades. Rising rates put pressure on developers, who then, in turn, put pressure on suppliers like FTC Solar to lower costs.

If rates continue to rise, it will likely lower the growth of utility-scale solar and potentially add pricing pressure, neither of which are good for FTC Solar. That's why the stock is down today.