#2 Worst S&P Stock: First Solar
First Solar (NASDAQ:FSLR) has a similar tale to tell as the S&P’s worst stock in 2012 (we’ll get to that in a minute). There just isn’t as much demand for energy in a weak economy, and there are just too many cheaper alternatives.
The problem with solar is that it remains expensive on the front end via installation of solar panels. In good times, many governments were subsidizing these solar panels via tax breaks — with Europe being one of the prime markets for companies like First Solar.
Now that crude oil has slumped to around $80 a barrel and natural gas remains super-cheap, and now that some eurozone governments are worrying about paying the electric bills let alone paying for solar subsidies … well, it’s lights out for FSLR.
First Solar has missed earnings expectations for four straight quarters, including a surprise loss in Q1 2012 after a 12% drop in revenue. Shares have responded in kind.