Every corporation faces risks. But solar companies in particular could face tough times ahead. Solar energy may be an emerging industry, but it's emerging into the electricity sector -- one of the most established, regulated, and carved-out sectors in existence.
Companies like SolarCity Corporation (NASDAQ: SCTY) and First Solar (NASDAQ: FSLR) have excelled against all odds over the past few years, ballooning sales in residential and utility-scale solar systems, respectively. But despite top-line expansion, bottom-line profit has been slower to follow. SolarCity Corporation has reported negative profits in four of the past five years, while First Solar dipped into the red for two of them.
In their annual reports, these companies are required to list all risks that could have a material impact on their financial well-being. Digging through these and other solar stocks, it's clear there are some industrywide trends every solar investor should know about. Here are three of the top reasons solar stocks could stumble in the years to come.