First Solar Soars 9.4% on Tax Credit Clarity and Earnings Surge – What’s Next?

Summary
• First Solar (FSLR) surges 9.42% to $218.79, hitting an intraday high of $221.50
• Treasury’s revised tax credit rules eliminate 5% safe harbor for large solar projects but preserve it for smaller installations
• Q2 earnings beat expectations, with revenue of $1.1B and gross margin of 42.8%

First Solar’s meteoric rise on August 18, 2025, reflects a perfect storm of regulatory clarity and financial strength. The Treasury’s tax credit guidance, which eased fears of retroactive restrictions, and the company’s outperforming Q2 results have ignited investor optimism. With the stock trading near its 52-week high of $262.72, the question now is whether this momentum can sustain.

Tax Credit Clarity and Earnings Surge Drive FSLR's 9.4% Rally
The Treasury’s August 15 guidance on clean energy tax credits removed the 5% safe harbor for large solar projects but preserved it for smaller installations, aligning with First Solar’s strategic focus on utility-scale projects. This clarity eliminated fears of retroactive restrictions, which had previously caused volatility. Simultaneously, First Solar’s Q2 earnings report—$1.1B revenue, 42.8% gross margin, and $217.50 price target from Seaport—underscored its operational efficiency and debt management (0.07 debt-to-equity ratio). Analysts at Jefferies and Citi labeled the guidance a 'clear win' for residential solar and a 'better-than-anticipated' outcome, respectively, fueling the 9.4% intraday surge.

Solar Sector Gains Momentum as JinkoSolar Rises 0.93%
The solar sector, led by JinkoSolar (JKS) at +0.93%, reflects broader optimism. While First Solar’s rally is tied to its earnings and tax credit clarity, peers like Enphase Energy (ENPH) and Sunrun (RUN) also gained 5–8%, indicating sector-wide tailwinds. However, First Solar’s 9.4% move outpaces the sector, driven by its unique positioning in utility-scale projects and debt discipline.

Options Playbook: High-Leverage Calls and Gamma-Driven Bets
• 200-day MA: $165.43 (below current price) • RSI: 64.79 (neutral) • MACD: 4.99 (bullish) • Bollinger Bands: $173.30–$193.16 (price above upper band)

First Solar’s technicals suggest a continuation of its bullish trend. Key levels to watch include the 52-week high of $262.72 and the 200-day MA at $165.43. The RSI at 64.79 and MACD above zero indicate momentum remains intact. For leveraged exposure, consider the FSLR20250822C220 and FSLR20250822C225 options, which balance liquidity and gamma sensitivity.

• FSLR20250822C220 (Call): Strike $220, Expiry 8/22, IV 63.72%, Leverage 37.65%, Delta 0.4785, Theta -1.50, Gamma 0.0245, Turnover $2.67M
- IV: Moderate volatility, Delta: Moderate sensitivity, Theta: High time decay, Gamma: Strong price sensitivity
- This contract offers a 272% payoff if FSLR hits $231 (5% upside from $218.79), with high gamma amplifying gains as the stock approaches the strike.

• FSLR20250822C225 (Call): Strike $225, Expiry 8/22, IV 65.28%, Leverage 54.59%, Delta 0.3651, Theta -1.28, Gamma 0.0225, Turnover $1.12M
- IV: Moderate volatility, Delta: Lower sensitivity, Theta: High time decay, Gamma: Strong price sensitivity
- With 54.59% leverage, this option rewards a breakout above $225, offering a 270% payoff at $236.13 (5% upside). High gamma ensures rapid premium growth as the stock nears $225.

Aggressive bulls should target a break above $225 with FSLR20250822C225, while FSLR20250822C220 offers a safer entry for a $220–$225 range. Both contracts benefit from high gamma and moderate IV, ideal for a continuation of the current rally.

Backtest First Solar Stock Performance
The backtest of FSLR's performance after a 9% intraday surge shows favorable short-to-medium-term gains, highlighting the stock's potential for positive movement following such events. The 3-Day win rate is 53.20%, the 10-Day win rate is 50.00%, and the 30-Day win rate is 60.10%, indicating a higher probability of positive returns in the immediate aftermath of the surge. The maximum return observed was 8.38% over 30 days, suggesting that there is potential for further price appreciation following a significant intraday increase.

Bullish Momentum Unlikely to Subside – Watch $225 Support and JinkoSolar’s Lead
First Solar’s 9.4% surge is underpinned by regulatory clarity and earnings strength, with technicals favoring a continuation above $225. The 200-day MA at $165.43 and 52-week high of $262.72 remain critical benchmarks. Investors should monitor JinkoSolar (JKS, +0.93%) for sector sentiment and FSLR’s ability to hold above $220. A break above $225 could trigger a retest of $262.72, while a close below $205 would signal caution. For now, the path of least resistance is up—position accordingly.