Shares of the Guggenheim Solar ETF fell more than 5 percent on Monday, while several solar stocks like First Solar, Inc. FSLR, SunPower Corporation SPWR and Canadian Solar Inc. CSIQ also recorded significant losses.
In an email to clients on Monday, Axiom Capital's solar analyst Gordon Johnson explained why solar stocks were getting "smoked."
Johnson cited a report by Japan Times in which a panel commissioned by Japan's Ministry of Economy, Trade and Industry (METI) has decided to restrict the access to the country's FIT program for PV installations to "stable solar power supplies."
The FIT Program Situation
Commenting on the news report, Johnson argued that a move by Japan to restrict access to the FIT program represents a "big risk," as Japan accounts for an estimated 16 percent of the total aggregated global solar installs in 2015.
Not An Isolated Selloff
Johnson further highlighted four other key periods in the solar market in which the Guggenheim ETF noticeably sold off.- The index corrected from $261 per share (8/28/08) to $46.80 per share (3/9/09).
- The index corrected from $91.60 (10/14/10) to $68.50 per share (11/30/10).
- The index corrected from $50.24 per share (3/6/14) to $36.93 per share (5/20/14).
- The index corrected from $45.16 per share (9/10/14) to $33.37 per share (10/13/14).
Bottom line, Johnson argued that the news coming out of Japan is "meaningful" and may represent "good shorting opportunities."
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