Sunedison Inc (NYSE:SUNE), SunPower Corporation (NASDAQ:SPWR), SolarCity Corp (NASDAQ:SCTY), and First Solar, Inc. (NASDAQ:FSLR) seem to have developed a puzzling and rather unfortunate correlation with the oil prices. Morgan Brennan reported on CNBC that this relationship is hard to fathom considering that oil has little to do with electricity, which is what these solar companies aim to provide to their customers’ homes.
“[…] Solar is a play on electricity meaning that it is more directly affected by the price s of coal and natural gas, which in spite of its own slide today, is still up about 5% for the month. Nonetheless we are continuing to see this solar oil pattern take shape. First Solar, Inc. (NASDAQ:FSLR), SunPower Corporation (NASDAQ:SPWR), Sunedison Inc (NYSE:SUNE), SolarCity Corp (NASDAQ:SCTY), Canadian Solar, all of those closing down big today,” informed Brennan.
The latest OPEC meeting has resulted in declines in stocks of oil companies for as much as 38%. This is based on the intergovernmental organization’s decision not to cut production. Consequently, oil producers in U.S. could be driven out of business, especially those with the cost of production significantly higher than that of OPEC members.
Solar stocks faced a less scary dip on the last trading day. Sunedison Inc (NYSE:SUNE) was down 4.67%, trading at $21.65, SunPower Corporation (NASDAQ:SPWR) also down about 4.32% at $28.16, while First Solar, Inc. (NASDAQ:FSLR) dived 5.29% at $48.8 and SolarCity Corp (NASDAQ:SCTY) was the one wth the least dip at 2.59%, which resulted in the last trading level of $55.
It will be interesting to see if this trend continues today, or whether analysts and portfolio managers realise the unfair treatment that the solar stocks have been receiving on the market and thus perhaps even trigger a rally. However, many would want to steer clear of the energy sector for now given the uncertainty that surrounds it.
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