After a bullish September when markets raced higher, investor sentiment headed south in October, resulting in the S&P 500 (^GSPC +1.20%) and Dow Jones Industrial Average (^DJI +1.79%) tumbling 1% and 1.3%, respectively. Several alternative energy stocks, however, suffered even steeper declines.
According to data provided by S&P Global Market Intelligence, First Solar (FSLR 0.73%), a leading manufacturer of solar panels, plunged 22%, while solid state battery specialist QuantumScape (QS +0.85%) and ChargePoint (CHPT +0.48%), a leader in electric vehicle (EV) charging infrastructure, dropped 10.4% and 12.4%, respectively.
NASDAQ: QS
Key Data Points
A variety of factors powered the bears' selling activity
Ripping higher on Oct. 24, QuantumScape stock benefited from investors' charged-up reaction to the company's third-quarter 2024 financial results presentation the day before, as the stock closed about 25% higher. The enthusiasm, however, didn't last long. On Oct. 28, the company provided an investor presentation that shook the bulls' resolve, and shares promptly headed south.
The reason? Investors are disappointed that a ramp-up in production isn't expected until 2026 at the earliest. While the company has achieved low-volume prototype production of its first commercial product -- QSE-5 -- in 2024, its goal for 2025 is to attain higher-volume production in 2025.
Meanwhile, clouds surrounded First Solar stock early in October, thanks to concerns stemming from its strike at various ports that the International Longshoremen's Association commenced on Oct. 1. KeyBanc analyst Sophie Karp, for example, speculated that the strike could affect First Solar, which relies on imports coming through the Port of Houston.
In the following days, a flurry of analyst downgrades further motivated investors to click the sell button. Roth MKM and Susquehanna both slashed their price targets on First Solar stock to $280 from $320 and $285, respectively. A weaker-than-expected third-quarter 2024 earnings report -- as well as downward revised guidance -- at the end of the month exacerbated the stock's slide.
NYSE: CHPT
Key Data Points
Instead of disappointing earnings reports, skepticism from Wall Street and President-elect Donald Trump's momentum in the polls last month weighed heavily on ChargePoint investors' minds. The first bearish stance from an analyst appeared on Oct. 3, when JPMorgan downgraded ChargePoint stock to underweight from overweight, choosing to not assign a price target.
According to The Fly, JPMorgan predicated its decision, in part, on the belief that ChargePoint would underperform its EV charging peers. Later in the month, Stifel analyst Stephen Gengaro slashed his price target to $2 from $3, maintaining a hold rating on ChargePoint stock.
Charging up the bears even further, the increasing possibility that Trump would win on Election Day led the bears to sell ChargePoint stock. Trump has been an outspoken critic of EV adoption in the United States and has strongly articulated his belief in growing domestic oil and gas production.
What's an alternative power investor to do now?
With the mystery of who will occupy the White House for the next four years resolved, it's clear that clean energy investors are now less confident, speculating that President-elect Trump won't express enthusiasm for renewable energy initiatives in the near future. But we're not investing for the next four years -- we're in it for the long haul. For those who are willing to expand their investing horizons beyond President-elect Trump's next term, First Solar is worth further investigation, as it's a solar industry leader.
QuantumScape and ChargePoint, on the other hand, are in less secure positions, and only investors who are comfortable with higher-risk investments should consider powering their portfolios with them.
