Solar Stocks: Fading Into The Sunset - SolarStar

Wow, that was some ugly action in the solar  sector on Wednesday.

Take a look at this list, which I snipped from Google Finance:

That’s the cream of the solar crop. Every one of them down at least 2.5%, and most down more than 5%.

I don’t think this is really too complicated: The solar industry simply continues to be devastated by falling prices, weak demand and disappearing government subsidies.

The day’s biggest loser was Trina Solar  . On Monday, the company slashed its guidance for Q3 module shipments to a range of 375-385 MW, down from a previous forecast of 450-480 MW. Trina also said it now sees Q3 gross margin of 0% to 1.5%, below previous guidance of mid-single digit margins.

“Our third quarter sales were adversely impacted by a continued supply-demand imbalance in the global PV  industry, high inventory levels and irrational pricing practices by some competitors in the market,” Trina CEO Jifan Gao said in a statement.

The solar sector, in short, remains a giant mess: Too many players, too much capacity, not enough demand and declining subsidies. The industry is badly in need of consolidation, whether via acquisition or bankruptcies.

Either way, the status quo is not sustainable; there’s too much red, and enough green.