Solar Sector Follows Sunedison Into The Red

The solar sector is not having a great Tuesday.

The entire sector was in the red in the afternoon session. Sunedison Inc SUNE led the way, down more than 18 percent after noted sector analyst Gordon Johnson made some bearish comments on PreMarket Prep earlier in the morning.

"Given the number of deals and the type of deals that they've done," the Axiom analyst said. "If they're unable to sell those projects, I don't know how much longer the equity can last." When asked if Sunedison's new financing deal was a good move, Johnson said, "Absolutely not. I think this deal makes me more cautious on the company’s ability to make it through 2016."

Movers

Here's a look at the how the sector was performing mid-day:

SunPower Corporation SPWR down 4.6 percent at $24.03.

First Solar, Inc. FSLR down 3.1 percent at $63.33.

SolarCity Corp SCTY down 7 percent at $44.29.

Vivint Solar Inc VSLR down 2.9 percent at $9.25.

Canadian Solar Inc. CSIQ down 4.5 percent at $21.35.

Trina Solar Limited (ADR) TSL down 3.1 percent at $10.10.

JinkoSolar Holding Co., Ltd. JKS down 2.3 percent at $20.99.

The Guggenheim Solar ETF TAN -- the sector ETF that has a market cap of about $267 million -- was down 2.9 percent at $25.55.

Tax Credits

Solar stock have come under pressure over the past month, partially due to the solar tax credit.

Forbes wrote last week, "With the extension of the tax benefits, wind and solar projects started before year's end will qualify for a 2.3 cents per kilowatt hour production tax credit. It will gradually diminish through 2019. Wind and solar projects could opt instead to take a 30 percent investment tax credit that reduces their federal taxes dollar-for-dollar by what they put into the project. The main difference is that the solar production tax credit will phase out at the end of 2022."

"On the solar side, the ramp down is an acknowledgement that solar is becoming economically competitive with other fuel options," Ray Hudson, director for DNV GL's solar segment, told Forbes. He noted that the cost of solar panels is dropping precipitously.