Sun is Setting on Solar ETF

Jacob Harper  |

While it may make little sense for the solar industry to behave as a monolith, with the price action of one or two solar plays affecting the market value of the sector as a whole, that has indeed been the case as of late. The price action has been predominantly negative and, as a result, the solar play-tracking ETF Guggenheim Solar (TAN) shedding 6.08 percent by midday. The formerly high-rising ETF has sunk 12.56 percent in the last month alone, potentially signaling a cooldown of one of the hottest ETFs of 2013.

The solar sector had a fantastic run in 2013, with stars like First Solar (FSLR) and, especially, the Elon Musk-chaired SolarCity (SCTY) leading the charge. While the run extended into early 2014, the upward mobility of the sector has been cooled considerably.

Canadian Solar (CSIQ) initiated the sector drop-off on March 5 with disappointing projections and poor earnings. Rightly or wrongly, this took several stock downs with it, and in the month following CSIQ’s poor guidance, the sector has experienced quite a sell-off. Despite a brief resurgence for CSIQ on March 28, the confederation of solar stocks has continued to dwindle down.  

Canadia Solar is far from being the rotten apple that spoils the bunch, however. Former industry wunderkind SolarCity has shed 26.21 percent of its value in the last month, reversing a spectacular run that had seen the stock notch a four-bagger.

Solar stocks across the board are all still way above from their price a year ago, with industry tracker TAN up 190 percent from its year-prior value. The market still seems long-term bullish on green energy. However, as the summer heats up the industry’s leading tracking fund is cooling down, and it’s going to take some major positive developments to reverse the downward trend of an industry.

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