Down 11% In A Week, Could First Solar Stock Rebound Anytime Soon?

FSLR: First Solar logo
First Solar

The stock price of First Solar (NASDAQ:FSLR) reached a new multi-year high of $112 in January this year, before a recent sell-off, especially dropping 11% in the past week. Solar stocks have been on the rise with the broader market, helped by rising crude prices (which usually aids renewable energy stocks). However, crude oil prices lost around 5% this past week, and combined with an overall drop in the broader index, First Solar stock lost 11%. However, oil prices aside, First Solar’s Q1 2021 earnings earlier this year saw a major improvement, as the new Series 6 cost-efficient panels which are cheaper to produce, have significantly helped margins. Despite revenue rising 1.5x, total operating expenses in fact dropped by $5 million, leading to a $100 million jump in adjusted operating income. The Q2 2021 results at the end of this month will confirm whether this cost-efficiency cam be sustainable for the company.

After a 11% fall in a week, will First Solar stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for FSLR stock average -3.5% in the next one-month (twenty-one trading days) period after experiencing a 10.9% drop over the previous week (five trading days).

But how would these numbers change if you are interested in holding FSLR stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test First Solar stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

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MACHINE LEARNING ENGINE – try it yourself:

IF FSLR stock moved by -5% over five trading days, THEN over the next twenty-one trading days FSLR stock moves an average of 0.7%, with just a 46% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of First Solar Stock Movements:

Question 1: Is the average return for First Solar stock higher after a drop?

Answer: Consider two situations,

Case 1: First Solar stock drops by 5% or more in a week

Case 2: First Solar stock rises by 5% or more in a week

Is the average return for First Solar stock higher over the subsequent month after Case 1 or Case 2?

FSLR stock fares better after Case 2, with an average return of 0.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.3% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how First Solar stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold First Solar stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For FSLR stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for First Solar after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although FSLR stock appears to be an exception to this general observation.

It’s pretty powerful to test the trend for yourself for First Solar stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

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