First Solar Faces Sharp Drop Amid Policy Shifts

First Solar ( (FSLR) ) has fallen by -17.26%. Read on to learn why.

First Solar has experienced a significant stock price drop of 17.26% over the past week, largely due to proposed U.S. legislation that could phase out key renewable energy tax credits by 2028. This legislative change, part of a broader tax-and-spending package, has caused widespread concern among solar companies, leading to a sharp sell-off in the sector. Despite this setback, analysts remain optimistic about First Solar’s long-term prospects, citing its strong fundamentals and strategic positioning in the utility-scale solar market.

The proposed policy changes have accelerated the timeline for phasing out tax credits, which were initially set to last until 2032. Starting in 2026, new projects will receive reduced credits, with a complete phase-out by 2028. However, First Solar is expected to benefit from the remaining Section 45X credits available through 2029, providing a financial cushion. This situation has created a near-term spike in demand for First Solar panels, as developers rush to secure projects before the credits diminish, potentially positioning the company for a stronger short-term performance.

Despite the recent volatility, Wall Street maintains a strong buy consensus on First Solar, with analysts setting ambitious price targets. The company is seen as well-positioned to navigate the policy shifts, thanks to its U.S.-based manufacturing and unique technology that aligns with domestic content requirements. As the market adjusts to these changes, First Solar’s scale and infrastructure may allow it to consolidate its position, outlasting smaller competitors and potentially gaining market share in the evolving renewable energy landscape.