Shares of FTC Solar (FTCI 2.96%) fell as much as 35.7% in early trading on Tuesday after reporting first-quarter 2021 financial results. Shares did bounce back and closed the day down just 12.8%, but that's still a rough performance for the stock.
FTC Solar reported $49.6 million in revenue for the quarter, which was down from $65.7 million a year ago. Net loss also jumped from $7.4 million to $27.8 million, or $0.28 per share.
What's shocking is that the gross margin was a negative 18.7%, and management expects the second-quarter 2022 non-GAAP gross margin to be negative 19% to negative 29%. There's simply no way to make a profit in that kind of environment, and FTC Solar doesn't seem to have any pricing power in today's market.
The market's negative reaction to some earnings reports has been harsh this year, but in this case, I'm surprised the stock didn't stay down. I don't see a path to better profitability, and FTC Solar can only survive for so long given the current level of losses. I am bullish on the growth in solar energy stocks longterm, but that doesn't mean every company will be a winner, and this is one I am certainly not buying after today's drop.