The already prevailing slowdown in the solar industry notwithstanding, terrible news came out of China and pulled the rest of the players down into deep mire. Ironically, the day I wrote about the strong fundamentals and aggressive plans of JinkoSolar
JinkoSolar is among the most promising of companies in the industry, pumping up shipments and revenues along with having plans for expansion in place. But this mishap has knocked the wind out of the company's sails, sending the stock down an incredible 28%. It's notable that JinkoSolar, along with its Chinese peers, was among just a few solar companies to have posted profits in the last quarter. But all of that has gone out the window for the moment, as all the Chinese players have borne the brunt of JinkoSolar's failings. Yingli Green Energy
The incident raises environmental concerns about the solar industry. As it is, solar stocks trade at dirt cheap multiples since the market doesn't expect much out of them. Such news could bring further negative publicity to the fledgling industry. Moreover, the liability that JinkoSolar incurs as a result of this leakage will be known only after proper assessment of the damage. If it turns out to be a heavy amount, JinkoSolar is in for some rough days ahead.
The bottom line
JinkoSolar apparently neglected to implement proper waste management measures, having failed numerous pollution tests over the last six months. Although management has promised to make good on the environmental loss, the damage has already been done. The company's reputation has taken a hit, which it will find difficult to contend with. Strong operations may help it bounce back, but the effects of regulations that the Chinese government is likely to impose after this incident remain to be seen. JinkoSolar is certainly down, but is it out? Markets have doomed the company on the heels of this event, but its performance has been good so far. We'll keep this stock on our watchlist and see how the story unfolds. To stay updated, click here to add it to yours, too.
Fool contributor Harsh Chauhan owns none of the stocks mentioned in the article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.