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First Solar Secondary Offering Hints at a Healthier Solar Industry

The First Solar Secondary offering announced on Tuesday may hint that the company sees a recovering solar industry. Other statistics show that the demand for solar is picking up.

On Tuesday, First Solar (NASDAQ: FSLR) announced that it will sell an additional 8.5 million shares of stock. Underwriters of the secondary offering will have the option of purchasing another 1.3 million shares to cover additional allotments. The company said it plans to use the proceeds from the offering for general business purposes including investments or acquisitions.

In the release, the company said,

“We intend to use the proceeds from the sale of our common stock offered hereby for general corporate purposes, which may include acquisitions of under development photovoltaic solar power system projects, investments in photovoltaic solar power system projects that will be jointly developed with strategic partners and capital expenditures or strategic investments to develop certain business units and expand in new geographies. Until we use the net proceeds as described above, we intend to invest the net proceeds in highly-rated short-term marketable securities.”

Also on Tuesday, the company reaffirmed its annual sales and income guidance but said that projects in Canada might close in the second half of the year instead of the second quarter.

What was once a high-multiple, triple digit stock retreated sharply but has since quadruped in value over the past year and 29.2 percent since early April.
Recent statistics show that the solar industry is poised to install more infrastructure than ever despite government incentives running out.

Over the last month, the stock has formed a base as it trades in a very tight range. The news of the secondary offering is diluting shares as the company retreats more than 5 percent in pre-market trading. Despite the technical weakness Wednesday morning, the secondary offering may signal that the company is confident that it has recovered enough to look at aggressive expansion.

Disclosure: At the time of this writing, Tim Parker had no position in any of the equities mentioned.

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