First Solar Plunges 9.8% on Jefferies Downgrade: Is This the Bottom or a Warning Shot?

Summary
• First Solar (FSLR) tumbles 9.78% intraday to $242.505, its lowest since late 2024
• Jefferies downgrades to 'Hold' with $260 price target, citing 'limited booking visibility'
• Intraday range of $240.25–$255.92 highlights sharp volatility amid sector headwinds

First Solar’s 10% pre-market collapse has sent shockwaves through the solar sector, driven by Jefferies’ bearish revision of its outlook. The downgrade, coupled with concerns over Section 232 tariffs and execution risks, has triggered a sharp selloff. With the stock trading near its 52-week low, investors are scrambling to assess whether this is a buying opportunity or a deeper correction.

Jefferies' Cautious Outlook Shakes First Solar's Momentum
Jefferies’ downgrade to 'Hold' from 'Buy' and slashed price target to $260 from $269 has ignited panic selling. The firm highlighted 'limited booking visibility' for 2026, strategic uncertainties, and potential margin pressure from Section 232 tariffs. These concerns, combined with First Solar’s recent six-of-seven-day losing streak, have eroded investor confidence. The downgrade amplifies fears that the company’s $4.5 billion U.S. manufacturing expansion may face headwinds if tariff carve-outs for Germany disrupt pricing dynamics.

Solar Sector Volatility Intensifies as Canadian Solar Slides 5.3%
The solar sector is under pressure, with Canadian Solar (CSIQ) down 5.28% as FSLR’s selloff reverberates. Both stocks face similar risks from Section 232 tariffs and near-term margin compression. However, FSLR’s sharper decline reflects its premium valuation and higher exposure to U.S. manufacturing costs. While Csiq’s lower leverage offers some respite, the sector’s synchronized weakness underscores systemic challenges in scaling domestic production amid global competition.

Bearish Options and ETFs Emerge as Key Plays Amid Solar Sector Turbulence
• 200-day average: 196.46 (far below current price)
• RSI: 57.55 (neutral but bearish bias)
• Bollinger Bands: 248.496–281.618 (price near lower band)
• MACD: 3.39 (bullish but weakening)

First Solar’s technicals suggest a short-term bearish bias despite long-term bullish fundamentals. Key support at $240 (lower Bollinger Band) and resistance at $255 (intraday high) define the near-term range. The 52-week low of $116.56 remains a distant concern, but immediate focus is on $240–$250. For options traders, the FSLR20260116P245 and FSLR20260116P250 put contracts offer high leverage and liquidity.

• FSLR20260116P245: Put option with 50.09% IV, 50.52% leverage ratio, delta -0.616, theta -0.616, gamma 0.0169, turnover 417,844. High leverage and moderate delta make it ideal for a 5% downside scenario (targeting $230.38 payoff).
• FSLR20260116P250: Put option with 53.56% IV, 44.44% leverage ratio, delta -0.773, theta -0.773, gamma 0.0178, turnover 829,683. Strong liquidity and high gamma position it for sharp price swings. A 5% drop would yield $212.50 payoff.

Aggressive bears should prioritize FSLR20260116P245 for its high leverage and moderate delta, while FSLR20260116P250 offers balanced risk/reward. If $240 breaks, these puts could outperform as the stock tests 52-week lows.

Backtest First Solar Stock Performance
The performance of First Solar (FSLR) after a significant intraday plunge of -10% in 2022 can be summarized as follows:1. Factory Expansion: FSLR announced the construction of a new $1.1 billion factory in Alabama, which is part of its plan to increase manufacturing capacity to over 10 GW by 2025. This expansion could indicate confidence in the company's future growth and potential to meet increasing demand for solar panels.2. Tariff Impact: Despite the potential benefits of the factory expansion, FSLR has faced challenges due to the Biden administration's decision to extend solar panel tariffs, which were initially imposed by Trump. The extension of these tariffs has been criticized for hindering climate change targets and increasing costs to consumers. As FSLR had a monopoly in the US utility market before the tariff exemptions, this could have negatively impacted its sales and market position.3. Legal Challenges: FSLR has been subject to class action lawsuits, with the latest deadline for shareholders to register for the class action being March 8, 2022. These legal challenges could add uncertainty and potential financial burdens for the company, which may have affected investor confidence and stock performance.4. Market Sentiment: The overall market sentiment towards FSLR has been cautious, as evidenced by the investigations into the company's alleged misrepresentations regarding its Series 6 solar module. This could indicate that investors are concerned about the company's product development and potential for growth.In conclusion, while FSLR has announced significant factory expansion, it has faced headwinds from tariff policies and legal challenges. The company's stock performance after the -10% plunge in 2022 would likely depend on how effectively FSLR navigates these challenges and communicates its growth prospects to investors.

Bullish Long-Termers Should Watch $240 Support, but Short-Term Caution Prevails
First Solar’s 10% drop has created a critical inflection point. While the stock’s long-term bullish case remains intact—driven by U.S. manufacturing expansion and solar demand—the near-term outlook is clouded by Jefferies’ bearish revision and sector-wide margin risks. Investors should monitor the $240 support level and watch for a rebound above $255 to confirm a short-term bottom. Meanwhile, Canadian Solar’s 5.28% decline highlights sector-wide fragility. For now, defensive positioning and options strategies offer the best path forward as volatility persists.