First Solar steadies after shorts peak, but analysts keep cutting

FSLR rose 5.7% over the past week to $185.90, an unusual result given that the median move across its closest correlated peers was negative: ENPH gained 2.2%, CSIQ 4.4%, while TE surged 15%, but RGTI, ASTI and IONQ each fell 9% to 15%. First Solar's short interest now stands at 11.1% of the free float, roughly 11.9 million shares, the highest level tracked in this series. Among that peer group, that level of short conviction is notably heavier than names like ENPH or CSIQ, where positioning is more moderate.

The short book has paused rather than reversed. As documented in the prior note, short interest jumped sharply in late October from around 9 million shares to nearly 11.8 million, a move driven by fresh demand rather than any squeeze on existing positions. This week the increment was small: roughly 54,000 shares added over five days, a 1.2% weekly decline on the ORTEX estimate. The lending market remains entirely relaxed. Availability is running at 635%, meaning more than six shares sit ready to borrow for every one currently lent out, up slightly from last week's 601%. Cost to borrow is 0.55%, fractionally higher on the week but well within the range it has held all month. The short score of 56.7 has been broadly flat for two weeks. The picture is one of a large short position that has stopped building, sitting in a market where there is no technical pressure to unwind it.

Options traders have grown more defensive over the same period. The put/call ratio at 0.90 is about 1.6 standard deviations above its 20-day average of 0.82, and while it pulled back slightly from Monday's near 52-week high of 0.91, the direction of travel over the past three weeks has been a steady rise from 0.76. That is consistent with a market that is hedging rather than pressing new shorts directly: options demand for downside protection has increased even as the borrow-and-sell route sits wide open.

The Street's response to October earnings was a broad-based target cut with ratings held. Morgan Stanley, JP Morgan, Barclays, Wells Fargo, RBC, Baird, Citigroup and Guggenheim all lowered price targets in the two days after the print, with Morgan Stanley moving from $326 to $307 and Wells Fargo the most aggressive trim, from $313 to $260. The consensus target now sits at $274, implying around 47% upside from the current price. The one outright downgrade came from GLJ Research, which moved from Buy to Hold with a $161 target, the only analyst on record with a target below the current share price. The factor scores capture the tension: earnings yield ranks in the 91st percentile and EV/EBIT in the 94th, two of the strongest value readings in the universe, while EPS momentum over 30 and 90 days both rank in the low-to-mid 30s, reflecting a deteriorating estimate trend.

The bull case rests on the domestic supply chain advantage. First Solar's CdTe technology carries no Chinese crystalline-silicon exposure, and AD/CVD actions alongside Section 232 tariffs continue to tighten economics for imported modules. The backlog runs to roughly 45GW sold through 2029, with ex-45X EBITDA margins estimated near 23%. The bear case is that the policy premium looks increasingly temporary: new US and non-China supply is arriving, US inventory is high, and the ex-45X business still looks like a high-single-digit-margin manufacturer. Any softening in Section 232 enforcement or a 45X credit passthrough to buyers would compress earnings quality quickly.

One mechanical factor worth tracking is ORTEX's index rebalance radar, which puts a 52% probability on First Solar being deleted from the CRSP US Large and CRSP US Mid indexes at the December 2026 Quarterly Review. The price that decides it is $185.93, which is essentially where the stock closed this week. At that review, index trackers would need to sell an estimated $240 million combined across the two deletions. The rank date is December 4 and the trade date December 22. That creates a price-sensitive threshold that sits almost exactly at current levels, and how the stock trades into early December will determine whether that mechanical selling materialises.