Canadian Solar Inc.: This Is Why CSIQ Stock Got Creamed Today

Solar Energy StocksCSIQ Stock Hammered After Earnings

Canadian Solar Inc. (NASDAQ:CSIQ) stock suffered a 9.5% decline on Monday as the third-quarter report came in below analyst expectations.

The drop came as many investors see the solar panel market as potentially under threat as a less clean energy-friendly U.S. president is set to take office in January.

Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) are among those companies, along with Canadian Solar, that could face setbacks if federal incentives for clean energy products are abolished in the United States, although Tesla and SolarCity are more consumer-oriented.

Canadian Solar had a rough Q3, with net revenue down at $657.3 million from $805.9 million in the second quarter of 2016, and third-quarter guidance in the range of $660.0 million to $710.0 million.

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Net income attributable to Canadian Solar was $15.6 million, or $0.27 per diluted share, compared to $40.4 million, or $0.68 per diluted share, in the second quarter of 2016.

Cash, cash equivalents, and restricted cash balances at the end of the quarter totaled $986.0 million, compared to $1.0 billion at the end of the second quarter of 2016. (Source: “Canadian Solar Reports Third Quarter 2016 Results,” PR Newswire, November 21, 2016.)

Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, had this to say:

Our solar module shipments and revenue came in at the low end of our guidance, due to the dislocation of the global solar market during the quarter and the quarter-end logistic disruption caused by the bankruptcy of Hanjin Shipping in September.

Our footprint now covers the world’s most attractive markets: the U.S., Canada, Japan, Brazil, China, Mexico, the United Kingdom and Africa. Investor interest in our high-quality project pipeline remains robust. We target to complete the sale of certain solar power plants in Canada and China either by the end of 2016 or early next year and have started the sales process of our projects in the U.S. as our projects there reaching COD.

Canadian Solar is one of the largest solar companies in the world and it will have to find a way to come back from these rather disappointing numbers which, along with the advent of President Donald Trump, could be a dangerous combination for not only Canadian Solar, but the industry at large.