First Solar Reports Q2 Profit Growth Amid Stock Decline

First Solar reported second-quarter net income of $423 million, or $3.92 per diluted share, up from $342 million in the same period last year. The company posted net sales of $1.06 billion, a 4% year-over-year decrease driven by customer contract terminations, though higher third-party module sales partially offset the drop. Adjusted EBITDA rose to $644 million from $560 million, signaling stronger operational efficiency despite the top-line contraction.

Coverage from GN auto stocks and energy-stocks analysts highlights a divergent view on the solar manufacturer’s trajectory. Piper Sandler initiated coverage with an Overweight rating and a $260 price target, arguing the market undervalues the firm’s vertically integrated, low-cost domestic supply chain. The firm projects gross margins reaching approximately 60% by fiscal 2028, exceeding the 56% consensus estimate, and anticipates adjusted EPS of $28.46, above the $27.76 average.

Cash Position Weakens Due to Capex

The company’s liquidity profile contracted during the first half of 2026. As of June 30, First Solar held a net cash balance of $1.7 billion, down from $2.4 billion at the end of 2025. The reduction was primarily attributable to seasonal working-capital requirements and capital expenditures for the South Carolina finishing facility. This investment in domestic manufacturing capacity supports the long-term margin expansion thesis outlined by recent research notes.

Stock Weakness Persists Despite Earnings Gains

Shares of First Solar fell approximately 22% year-to-date as of September 9, reflecting investor caution regarding policy risks and competition. The stock faces headwinds from potential changes to US tax credits, such as the 45X credit, and evolving tariff landscapes. Hedge fund interest has also waned, with 64 funds holding positions in Q2 2026 compared to 67 in Q1, according to Insider Monkey data.

High Short Interest Signals Market Skepticism

Market sentiment remains cautious, evidenced by short interest standing at 11.86% of the company’s float as of August 14. This level of shorting indicates significant bearish positioning against the stock, even as fundamental metrics like EBITDA and EPS show improvement. The divergence between improving quarterly results and declining share price underscores the market’s focus on long-term policy stability and competitive pressures rather than current profitability.