Do Not Buy First Solar

I wrote about FSLR's overvaluation prior to their last earnings release, and the results disappointed the street, leading to share price decline.

During the last conference call, management cited economic headwinds and increased competition as risks to future performance. I don't think either of those threats decreased materially over the past quarter, and I expect both to continue into the future.

The general business environment may improve as the world economy recovers and developed nations continue to become "greener," but FSLR's competition gets stiffer by the day. Solar has become commoditized, and both traditional silicon-based panels and other thin-film competitors will continue to erode demand for FSLR products.

The share price will likely be very volitile after this earnings release; a plesasant surprise will send shares skyward, while continued disappointment will drive shares lower. FSLR still trades at a premium valuation, and I believe that shares have plenty of room to fall.