“First Solar faces investor scrutiny from a law firm probe into potential securities issues and recent adjustments to its 2025 financial outlook, yet its core strengths in U.S. manufacturing, proprietary thin-film technology, and supportive policy environment continue to underpin a compelling long-term growth story for solar investors.”
Detailed Analysis
First Solar (NASDAQ: FSLR) has long stood out in the solar industry as a leader in utility-scale photovoltaic solutions, leveraging its cadmium telluride (CdTe) thin-film technology that offers advantages in energy yield, lower degradation rates, and reduced material intensity compared to conventional silicon-based panels. The company’s vertically integrated operations in the United States position it uniquely to benefit from domestic content requirements under the Inflation Reduction Act (IRA), which provides substantial tax credits and incentives for U.S.-made solar modules. This structural edge has fueled a multi-year expansion of manufacturing capacity, with new facilities coming online to meet surging demand from utility and commercial projects.
Recent developments, however, have introduced short-term headwinds that have prompted questions about the sustainability of the bullish thesis. In early 2026, law firm Pomerantz LLP initiated an investigation into First Solar regarding potential securities fraud or other unlawful business practices. The probe examines whether the company and its executives made misleading statements or omitted material information in disclosures to shareholders. This follows patterns seen in prior solar sector scrutiny, though no formal charges, findings, or resolutions have emerged. Such investigations often arise after stock movements or analyst commentary and remain preliminary, frequently concluding without significant action. For First Solar, which has maintained a reputation for strong governance in the clean energy space, this represents more of a sentiment overhang than an immediate fundamental threat.
Compounding the uncertainty, the company has adjusted its 2025 financial guidance downward in recent updates. Current expectations include net sales in the range of $4.95 billion to $5.20 billion, gross margin between $2.10 billion and $2.20 billion, operating income of $1.56 billion to $1.68 billion, and earnings per diluted share of $14.00 to $15.00. This reflects a tightening from prior ranges, influenced by factors such as project timing, supply chain dynamics, and competitive pricing pressures in the modules segment. While the revision signals a more cautious near-term trajectory, it still projects robust profitability and positive cash flow generation.
First Solar’s balance sheet remains a key pillar of resilience, with expectations for a year-end net cash balance of $1.6 billion to $2.1 billion in 2025. This liquidity supports ongoing capital expenditures for factory expansions and provides a buffer against volatility in the renewable energy market.
The competitive landscape adds another layer to the discussion. Emerging threats include Tesla’s ambitious plans for vertically integrated U.S. solar manufacturing, which could intensify pricing competition and challenge market share in utility-scale deployments. Analyst reactions have been mixed: some firms have downgraded ratings citing de-bookings, margin compression, and heightened rivalry, while others maintain outperform views, emphasizing First Solar’s technological moat, lower levelized cost of energy (LCOE) in certain applications, and IRA-driven advantages.
Patent developments provide a counterbalance to competitive concerns. In late 2025 and early 2026, the U.S. Patent and Trademark Office upheld several of First Solar’s key patents related to tunnel oxide passivated contact (TOPCon) technology against challenges from rivals including JinkoSolar, Canadian Solar, and others. This reinforces the company’s intellectual property position and ongoing litigation efforts to protect its innovations.
Market performance reflects these crosscurrents. As of mid-February 2026, FSLR trades around $225-226 per share, up from recent lows but well below its 52-week high near $286. The pullback has created a more attractive entry point for long-term investors, with average analyst price targets suggesting meaningful upside potential.
Key Bull Case Elements That Remain Intact
Domestic Manufacturing Leadership — Expanding U.S. capacity aligns perfectly with policy incentives, insulating the company from import tariffs and supply disruptions affecting overseas competitors.
Technological Differentiation — CdTe modules deliver superior performance in hot, humid conditions prevalent in many U.S. solar markets, supporting higher project returns.
Strong Backlog and Visibility — Multi-gigawatt order book provides revenue predictability through 2027 and beyond.
Financial Discipline — Consistent profitability, debt-light structure, and cash generation enable sustained investment without excessive dilution.
Policy Tailwinds — IRA extensions and potential additional clean energy support continue to favor U.S.-centric players like First Solar.
Potential Risks to Monitor
Escalation of the ongoing investigation, though early-stage and unsubstantiated.
Further guidance revisions if module pricing erodes more than anticipated or if project delays persist.
Intensified competition from integrated players scaling domestic production.
Broader sector volatility tied to interest rates, energy prices, and policy shifts.
Overall, while the legal probe introduces governance questions and guidance adjustments temper near-term expectations, they do not fundamentally alter the bull case for First Solar. The company’s strategic positioning in a policy-supported, high-growth industry, combined with its execution track record, suggests that current pressures may represent a temporary dip rather than a structural break. Investors with a multi-year horizon may view recent developments as an opportunity to accumulate shares in a proven leader amid the ongoing energy transition.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation to buy or sell securities, or financial, legal, or tax guidance. Investing in stocks involves significant risk, including potential loss of principal. Readers should conduct their own due diligence and consult qualified professionals before making decisions.
