Welcome to the roller coaster.
One day the markets are up, another they're down... a person can get dizzy these days just tracking the motion of the various stock indexes. They'd also get woozy following the downward trajectory of the following two prominent stocks, each of which took a tumble on Thursday. Perhaps, though, this makes them buys on their reduced prices.
It was an overcast trading day for solar energy stocks in general, with most of the notable ones losing more than the S&P 500 index. These traded down anywhere from 3% to almost 10%. Landing more or less in the middle was a bellwether stock in this business, First Solar (NASDAQ: FSLR).
Nothing specific slammed into the industry on Thursday, so it's hard to tease out any immediate reasons for these sell-offs. Perhaps, on a bearish day, it's easier to get spooked about stocks that have had significant runs -- as have First Solar and quite a few of its peers. Even with today's downtick, First Solar stock is still up 47% year to date, while peers have risen even higher. That compares very well to the S&P's increase of 19%.
Another dynamic at work here is the volatility of the solar energy sector. We should bear in mind that, as a viable industry, it is still quite young. And the current imported solar cell tariff regime, while not as damaging as initially feared, is holding back an otherwise high-potential industry.
Meanwhile, there are plenty of players in this game, costs are rising in the business, profitability is erratic, and valuations are high. Even though First Solar's stock price was whacked hard today, the blow wasn't hard enough to make me a buyer, although I like the company specifically and the solar sector generally.
A more definite factor was at work today in the brokerage sector, with TD Ameritrade (NASDAQ: AMTD) getting hit particularly hard. The stock declined by almost 7% on the day.
The factor was Interactive Brokers, a relative upstart that announced today it was rolling out a new service (IBKR Lite) that would allow clients to trade stocks and ETFs commission-free with no limits. The service will also not penalize customers with inactivity fees, and it has no account minimum.
Does this ring a distant bell, followers of the brokerage sector? It should. In 2017, TD Ameritrade peers Fidelity and Charles Schwab reduced their commissions on trades to $4.95. (TD Ameritrade also reduced, but not that drastically -- it set a rate of $6.95.) Not to be outdone, JPMorgan Chase put a big fat zero on its commission rate for the first 100 equity trades made by its clients, and financial services provider Robinhood also went the $0 route.
At the time, TD Ameritrade weathered the storm pretty well, managing to grow key operational and financial metrics despite the price-smashing cyclone on the market.
What helps is its broad slate of products and services. I'm both a shareholder and a client, and I'd say these are fairly comprehensive for my (admittedly modest) needs. So I don't mind paying less than an Abe Lincoln for each of my trades. The continued growth in customer numbers, while not spectacular, indicates TD Ameritrade is doing a reasonably good job of customer retention and acquisition.
Zooming out a bit, despite Thursday's stock market slump, we're still riding a very long bull market. Trading is robust; people still want to own stocks, ETFs, and everything in between. I think TD Ameritrade will again pull through and I still rate the stock as a buy, although I'm keeping a wary eye on commission rates -- I think the price war has some battles to come.
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