Markets

Why First Solar Stock Dropped 10% This Morning

What happened

It's Thursday, and the Nasdaq is tumbling again, down 1.6% at 10:30 a.m. EDT. Leading the way down is solar stock First Solar (NASDAQ: FSLR). Shares of the solar panel maker fell 10.6% in early trading in response to an announcement on Wednesday night that a corporate insider is selling off 8.6 million shares at a below-market price: $69, or nearly $2 below yesterday's closing price.

Simple red arrow declining stock chart on a white checked background

Image source: Getty Images.

So what

First Solar announced the secondary offering of stock after the close of trading on Wednesday. The 8.6 million shares, or approximately 8.2% of all shares outstanding, will be sold by billionaire Walmart heir Lukas T. Walton. First Solar only clarified the $69 sale price early Thursday morning.  

Why would investors (other than Walton himself) care about this sale? For one thing, there's the selling pressure to consider: When 8.6 million shares flood onto the market at $69 each, it's unlikely First Solar's remaining shares will sell for much more than that.

The size of this sale may also suggest a lack of confidence in First Solar by one of its largest (and presumably best-informed) shareholders. Adding to this worry, Walton said last night that he plans over time to donate another 8.6 million First Solar shares "to various charitable organizations focused on urgent issues facing society and the environment, including relief efforts related to the COVID-19 pandemic."

Now what

So Walton has announced plans to divest himself of some 16.5% of all First Solar shares. Whatever his specific reasons for doing so, they probably don't include a conviction that these shares are going up.

That being said, even after all these divestments have been accomplished, Walton will still own 4.9% of First Solar's outstanding shares, so he's not abandoning the stock completely. Whatever his reasons for that, they don't clearly indicate he's lost faith entirely.

10 stocks we like better than First Solar
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and First Solar wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of August 1, 2020

 

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends First Solar. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

FSLR

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More