Solar stocks, including SunPower (SPWRA), fell in the early hours of trading today (May 3) after surging upon the April 28 news that Total (TOT), a French oil company, would buy a 60 percent stake in the U.S. solar company.
Other solar stocks, including LDK Solar Company (LDK), JA Solar Holdings (JASO), JinkoSolar Holdings (JKS) and MEMC Electronic Materials (WFR) were all up more than 4 percent on Monday and fell back Tuesday morning.
Analysts speculated Monday that solar stocks, especially those strong enough they might attract a big oil suitor the way SunPower did, would rise on investor hopes that other oil giants like Total would invest in renewables.
In addition to the $1.38 billion Total has bid for the SunPower shares, a 46 percent over valuation of the stock’s closing price on April 28, the company said it would provide $1 billion in credit to SunPower over the next five years in order to help the company grow and thrive.
“Total’s commitment and global presence will help accelerate our growth and solidify our position in the increasingly competitive solar sector,” SunPower CEO Tom Werner was quoted in a press release.
Analysts and researchers are suggesting that Total’s acquisition is just the beginning and that big oil ventures will begin investing more and more in the renewable sector.
"The sale of a majority stake of SunPower to Total is a reflection that traditional energy companies are seeing that there are large scale profits to be made in the renewable sector,” Said Ken J. Beitel, advisory board chair for the Renewable Energy Initiative, a non-profit focused on growing private investment in the renewable energy sector. “This deal is timely as the price of fossil fuels continue to rise and events in Japan make the construction of new nuclear less likely.”
While Total’s SunPower buy is a high-profile acquisition, Beitel said it’s not the first of its kind.
“It's worth noting that last year, Areva, the French nuclear giant, purchased Ausra, a leading concentrating solar manufacturer,” he said. “Energy companies are seeking the acquisition of broader and lower risk revenue streams."
While solar stocks certainly seemed to be reacting to the SunPower and Total news, some of their Monday rise and today's slip could have been in keeping with stock trends in general following news of Osama Bin Laden’s death.