Market Overview

Solar Still Suffering After Positive Spain Ruling, Canadian Solar Whiff

Solar Still Suffering After Positive Spain Ruling, Canadian Solar Whiff

The solar power industry got some good news from Spain this week, as the Spanish parliament agreed to remove the controversial “sun tax” on solar energy self-consumption. Shareholders of SolarCity Corp (NASDAQ: SCTY) and Canadian Solar Inc. (NASDAQ: CSIQ) are counting the decision as a moral victory. For now, the market seems far more concerned with the two companies’ disappointing Q4 earnings reports and Q1 guidance.

The current sun tax abolishment agreement still needs to be approved formally in the Spanish parliament. However, Spain now finds itself in a complicated political situation. It is unclear whether the country will need to have new general elections in June before forming a new government.

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The conservative Partido Popular party is the main supporter of the sun tax, but the party holds just 120 seats in the parliament.

The moral victory in Spain has done very little to boost slumping shares of Canadian Solar, which have plummeted 13.7 percent this week on disappointing Q1 guidance. The high range of the company’s guidance was $695 million, well short of the $803 million consensus estimates.

SolarCity had its own earnings disappointment last month, and shares are now down 49.8 percent year to date. The market was not impressed by SolarCity’s 18 percent growth projections for Q1.

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

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