GT Solar’s stock received a cool reception from investors Thursday, when its shares dipped more than 11 percent during its first day on the Nasdaq stock exchange.
The company (NSDQ: SOLR) raised $500 million through an initial public offering, the largest ever by a U.S. solar company. GT Solar, based in Merrimack, N.H., sold 30.3 million shares at $16.50 per share, a midpoint in the price range the company had set.
GT Solar’s stock performance is more likely a result of on-going concerns about feed-in tariff programs in Europe, the largest solar market, said Ben Pang, managing director of Caris & Company.
Spain, which has a lucrative feed-in tariff that requires utilities to buy all the solar energy generated through long-term contracts, wants to cut public subsidies by September, when the current program expires (see Spanish Solar Group: Don’t Change Feed-In Tariffs). The German government approved a set of smaller subsidies in June (see Solar Prices Set in Germany).
Although the subsidies have a more direct impact on solar panel makers and solar power plant developers, companies that develop tools and machines for making solar power system components are likely to see their stocks move along with the rest of the industry.
“The whole solar space is going to be trading sideways until there is some clarity on how much the subsidies can be built into their business models,” Pang said.
GT Solar’s shares fell 11.88 percent to reach $14.54 per share in recent trading. Shares of other solar companies, including SunPower, Evergreen Solar, Trina Solar and LDK also fell during recent trading.
Lower subsidies would help the industry’s long-term growth because solar companies need to focus on making money by developing good technologies instead of counting on government assistance, Pang added.
“Taking the pain right now bodes well for the long term,” he said. “It’ll put more premium on technologies, which drive down cost.”
GT Solar, which develops equipment for making polysilicon, wafers, cells and panels, has benefited from the booming global solar market.
GT Solar generated $244.05 million in revenue during the fiscal year that ended March 31, quadrupling the revenue from the previous year. The company made a net income of $36.11 million for the same fiscal year, compared with a loss of $18.36 million from the previous year.
GT Solar’s recent sales announcements included a $173 million contract to sell polysilicon reactors to DC Chemical in South Korea, according to the company’s filings with the Securities and Exchange Commission. The equipment maker also inked a $91 million deal to sell reactors and converters to The Silicon Mine in the Netherlands.
Like other equipment companies such as Applied Materials in Santa Clara, Calif., GT Solar is in the polysilicon-based solar market. The majority of solar panels made today use polysilicon as the primary material.
A growing number of panel makers are developing different sets of materials to make thinner and more flexible panels that promise to cost less than polysilicon-based panels. But so far, thin-film technologies haven’t been able to be as efficient at converting sunlight into electricity.
Thomas M. Zarrella said the company isn’t selling equipment to the thin-film market, a description of the company’s MODFAB fabrication line its Website says the “equipment may also be used to manufacture thin-film modules.”
“That’s a surprise to me,” Zarrella said, when asked about the marketing pitch on the Website.
GT Solar was first founded in 1994 but was called GT Equipment Technologies. The company changed its name in 2006, the year two investors, GFI Energy Ventures and Angeleno Group, bought a majority stake in the company.