Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

What Does First Solar, Inc. (FSLR) Need More Cash For?

First Solar, Inc. (NASDAQ:FSLR) asked for another infusion of cash this week, and with one of the best balance sheets in solar, it’s reasonable to wonder why the company needs more money from investors. It ended last quarter with $1.3 billion in cash, restricted cash, and securities, and just $562.2 million in long-term debt, better than every other publicly traded company in solar.

First Solar, Inc. (NASDAQ:FSLR)Yesterday, the company announced a public offering of 8.5 million shares, 9.8 million if underwriters exercise their overallotment, which will raise $450 million at the $46 offer price. But why does a company with a solid balance sheet need so much money?

One of the challenges for solar companies building projects is the amount of money put into projects before they’re sold. First Solar, Inc. (NASDAQ:FSLR) is building the $2 billion Topaz Solar Farm in California and the $1.8 billion Agua Caliente project in Arizona right now, requiring a lot of capital to complete. Inventory, construction costs, and operating costs before the project is turned over to new owners, requires capital.

SunPower Corporation (NASDAQ:SPWR) made a similar move in late May when it offered $300 million of convertible notes, due 2018. The notes carry a low interest rate of 0.75%, but can be converted into shares of SunPower Corporation (NASDAQ:SPWR) stock at $24.95 per share if shares trade above that level by then. So, this wasn’t a full-share sale like First Solar, Inc. (NASDAQ:FSLR)’s announcement, but it’s dilutive nonetheless.

Both companies are looking at these offerings as a way to shore up balance sheets and prepare for investments in project and lease developments in the future.

Investing in the future
First Solar, Inc. (NASDAQ:FSLR) may also be planning to build production based on its TetraSun acquisition. The start-up company would use a manufacturing process very different from First Solar, Inc. (NASDAQ:FSLR)’s thin film, and would likely require hundreds of millions in capital investment to launch.

Or First Solar, Inc. (NASDAQ:FSLR) may just be extracting capital from the markets after a fast stock run-up.

What Does First Solar, Inc. (FSLR) Need More Cash For?FSLR Total Return Price data by YCharts

The solar market has been volatile, and we’re far from being certain about long-term winners and losers. If a company can pull some cash when the stock is high, I say more power to them. My hope is that First Solar, Inc. (NASDAQ:FSLR) has some big plans, and this is the start of a long run higher for the stock.

The article What Does First Solar Need More Cash For? originally appeared on

Fool contributor Travis Hoium manages an account that owns shares of SunPower Corporation (NASDAQ:SPWR) and personally owns shares and has the following options: Long Jan 2015 $7 Calls on SunPower, Long Jan 2015 $5 Calls on SunPower, Long Jan 2015 $15 Calls on SunPower, and Long Jan 2015 $25 Calls on SunPower Corporation (NASDAQ:SPWR). The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!