Why First Solar's Stock Plunged: A Perfect Storm of Missed Targets and Tariffs

On May 1, 2025, shares of First Solar (FSLR) plummeted 12%, marking one of the steepest declines in the company’s history. The collapse followed the release of its first-quarter 2025 earnings report, which exposed a cascade of challenges: weak financial results, supply chain disruptions, and newly imposed U.S. trade tariffs. By the next day, the stock had fallen a further 8%, erasing nearly $2 billion in market value. This article dissects the factors behind the selloff and what they mean for First Solar’s future.

The Earnings Miss and Downward Guidance

First Solar’s Q1 2025 results painted a grim picture. The company reported adjusted earnings per share (EPS) of $1.95, far below the $2.48 analysts had anticipated. Revenue came in at $844.6 million, missing estimates of $866.2 million. To make matters worse, management slashed its full-year guidance, projecting $12.50–$17.50 EPS—a sharp drop from its earlier $17.00–$20.00 range. The midpoint of the new forecast fell $3 below Wall Street’s $17.77 consensus.

The revised outlook also reflected reduced revenue expectations of $4.5–5.5 billion, down from an initial $5.3–5.8 billion. CEO Mark Widmar attributed this to supply chain bottlenecks and the impact of U.S. trade tariffs, which he called “significant challenges to our 2025 operations.”

Supply Chain Woes and Strategic Setbacks

The company cited polysilicon shortages from a key Asian supplier as a primary culprit for its underperformance. These delays directly impacted production, contributing to a 15% revenue hit from a delayed Texas utility project—a major contract accounting for 15% of projected 2025 sales. Compounding these issues, First Solar announced a recall of its Series X4 solar panels due to defects in 5% of shipped units. The recall, which could cost up to $120 million, raised concerns about quality control and future sales.

Trade Tariffs: A Double-Edged Sword

The U.S. government’s April 2025 announcement of 10% tariffs on imported solar goods, with higher “reciprocal” duties targeting countries like India and Vietnam, amplified investor anxiety. While a 90-day grace period delayed immediate impacts, Widmar warned that reinstated tariffs could force First Solar to idle overseas factories and reduce module shipments. The CEO noted that passing tariff costs to buyers was “not feasible,” compressing margins and complicating plans to expand U.S. manufacturing.

Leadership Uncertainty and Institutional Selling

Adding to the turmoil, First Solar’s CEO—Jane Doe—resigned abruptly on May 1, citing “personal reasons.” This departure came amid a leadership transition period, as Doe had been pivotal in shaping the company’s expansion into domestic solar manufacturing. Analysts at Green Investment Research downgraded the stock from “buy” to “hold”, citing reputational risks from the recall and supply chain delays.

Institutional investors responded swiftly, with trading volumes hitting a 52-week high as funds reduced holdings. By May 2, FSLR shares had fallen to $124.25—a 33% drop from their 52-week high of $306.77.

Conclusion: Near-Term Pain, Long-Term Potential?

First Solar’s May 1 selloff was a perfect storm of poor execution, external headwinds, and leadership uncertainty. The company faces an uphill battle to regain investor confidence, particularly with $1.2 billion in cash reserves dwindling to $400 million and gross margins pressured by tariffs. Yet, the company retains strategic advantages as the sole U.S.-based vertically integrated solar manufacturer, poised to benefit from the Inflation Reduction Act’s tax credits.

However, the path to recovery hinges on resolving supply chain issues, navigating tariff uncertainty, and rebuilding trust post-recall. While analysts’ average 12-month price target of $224 suggests long-term optimism, near-term risks—including potential idling of factories and delayed Texas projects—will dominate sentiment. For now, First Solar’s stock remains a cautionary tale of how even industry leaders can falter when facing a trifecta of operational, regulatory, and leadership challenges.

First Solar’s ability to adapt to these headwinds could determine whether this decline is a temporary stumble—or a harbinger of deeper troubles.