QS Research · Michael Burry's Scion Capital analyst template · 2006
FIRST SOLAR, INC. (FSLR)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -52% · downside -82% · upside -1%
The market is capitalizing TTM EBITDA of $2.48B at 8.1x, but that EBITDA is 2.2x the FY2020-FY2025 cycle average of $1.12B; at the same 8.1x multiple, normalized EBITDA supports about $97/share, -52%. The 2026-10-29 guidance cut and the backlog slide from 47.9 GW to 44.0 GW are the catalysts that can force the market to re-base on cycle earnings, while the $500M buyback and Section 232 pricing are the main supports. The stock is a short: base -52%, downside -82%, upside only -1% at today's multiple, so the asymmetry is against a buyer. Conviction is medium because peak margins could persist longer than the cycle base assumes and the 10.8% short interest can squeeze.
Key numbers
- Share price: $201.14
- Market cap: $21.62B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $5.01B
- EV / EBITDA (TTM): 8.1x
- P/E (TTM): 11.6x
- Price / book: 1.99x
The 15 boxes
- ✓ 1. Long-form business notes
First Solar's latest 10-K describes a CdTe module manufacturing and sales business concentrated in the U.S. (96% of 2025 net sales), while the FY2020 10-K still included power plant solutions, O&M and a U.S. project-development sale. Between FY2020 and FY2025 revenue went from $2.71B to $5.22B, with FY2022 the weak year (operating loss $27.2M) and FY2025 operating income $1.60B. Manufacturing has expanded from the older U.S./Malaysia/Vietnam footprint to include India and new U.S. Series 7 lines.
- ✓ 2. Competitive advantage
The advantage is a technology and policy arbitrage, not a pricing moat: First Solar competes on sales price per watt against crystalline silicon makers, the majority linked to China, and the 10-K concedes those rivals may have sovereign capital and can run at minimal or negative operating margins for sustained periods. What the company does claim is differentiated thin-film (CdTe, no polysilicon) technology, integrated manufacturing and a tightly controlled supply chain - and U.S. domestic-content/FEOC and Indian local-content rules that change relative cost positions. The financial record supports scale economics but not stability: gross margin ran 25.1% (FY2020), 25.0% (FY2021), 2.7% (FY2022), 39.2% (FY2023), 44.2% (FY2024), 40.6% (FY2025), with operating margin at -1.0% in FY2022 - a five-year step-up that one demand-air-pocket year erased. A $50 million warranty liability at 12/31/2025 for identified manufacturing issues is a direct offset to the quality/reliability leg of the pitch.
- ✓ 3. 10-Q takeaways
Q3 2026 net sales fell 22.8% y/y to $1.2B on lower third-party module volume and contract terminations, while gross margin rose to 57.9% from 38.3% on more Section 45X-qualifying modules and higher ASP; net income was $571M ($5.30 diluted) and Adjusted EBITDA $744M. Net cash was $1.5B at Sep 30 2026 vs $2.4B at Dec 31 2025, inventories rose to $1,138.584M, and the board authorized a $500M buyback. 2026 guidance was cut for volume and net sales but gross profit was unchanged; backlog was 44.0 GW/$13.5B. The 10-Q risk-factor update says no material changes except the listed subsidy/tariff risk, and MD&A flags the Section 232 polysilicon proclamation effective Dec 4 2026.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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