Why First Solar Stock Dived by Almost 18% Today

The U.S. solar industry's tax credits might end up melting away sooner than expected.
A Senate committee has proposed this for the current budget bill.
10 stocks we like better than First Solar ›
Many parts of the U.S. were sunny on Tuesday, but that happy situation didn't extend metaphorically to solar energy stocks. Quite a few took major hits that trading session on the latest developments in the legislative sphere.
One of the industry's victims was First Solar (NASDAQ: FSLR), which went dim with a nearly 18% decline in its share price. That decline was far steeper than the 0.8% slip of the S&P 500 index that day.
President Trump's One, Big, Beautiful Bill remains a massive bone of contention in Congress, and has been the subject of much criticism and debate among lawmakers. It's also undergoing change as Senators adjust it in an effort at compromise.
On Tuesday, the Senate Finance Committee proposed speeding up the elimination of tax credits for solar and wind energy. Under current law, these do not expire until 2032; under the new proposal, they would be reduced by 60% next year and phased out entirely in 2028.
This contrasts with the bill's stance on tax credits for other forms of energy, specifically nuclear, hydroelectric, and geothermal. In its current form, the proposed law would actually extend these credits to 2036.
Although there is likely far more horse trading to come before the Senate finally settles on a form of the bill it can accept, renewable energy will almost certainly remain a target.
Investors are right to be concerned about the effect on solar and other types of green energy companies, although this feels like an over-reaction -- the better companies in this segment should be able to adjust to the demise of tax credits.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends First Solar. The Motley Fool has a disclosure policy.
Why First Solar Stock Dived by Almost 18% Today was originally published by The Motley Fool

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