Why First Solar (FSLR) Stock Is Dropping Today

Recent Developments Affecting First Solar

First Solar (NASDAQ:FSLR), a leading solar panel producer, experienced a 10% decline in its stock price during morning trading after Jefferies shifted its rating from 'Buy' to 'Hold' and reduced its price target from $269 to $260.

The downgrade, led by analyst Julien Dumoulin-Smith at Jefferies, was attributed to several factors. The firm cited uncertainty regarding First Solar’s order pipeline for 2026, which clouds the outlook for future revenue. Additional concerns included the possibility of shrinking profit margins and ambiguity about the company’s long-term strategy. Jefferies concluded that, given these operational and profitability risks as well as the stock’s already robust valuation, there is limited potential for significant price gains in the short term.

Market reactions can sometimes be exaggerated, and sharp declines may create opportunities to invest in strong companies. Could this be a favorable moment to consider First Solar?

Market Sentiment and Stock Performance

First Solar’s stock is known for its high volatility, having experienced 36 price swings exceeding 5% over the past year. However, a drop of this magnitude is unusual even for this company, suggesting the recent news had a notable effect on investor sentiment.

Just 15 days ago, the stock fell 6.3% after reaching a new 52-week high of $281.87, driven by concerns that its valuation had become stretched. The elevated price-to-earnings (P/E) ratio compared to projected short-term earnings growth indicated the shares may have been overpriced, prompting some investors to lock in profits.

Since the start of the year, First Solar’s share price has declined by 12%. Currently trading at $241.50, the stock sits 15.1% below its December 2025 peak of $284.59. For context, an investor who put $1,000 into First Solar five years ago would now see that investment grow to $2,289.

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