Spotlight on Technology Earnings
Remember that option premiums generally climb into earnings, so if you want to hedge as a buyer or seller act accordingly.
Before the Open:
What it Does:
LDK is a manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK sells these wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. The company was founded in 2005 and is based in Xinyu City, China. LDK trades an average of 1.9 million shares per day with a market cap of $285 million.
LDK is anticipated to report weak first-quarter earnings before the market opens on Tuesday. The consensus estimate is currently -$1.14 a share, a decline of $2.09 (220 percent) from 95 cents during the same period last year. Last quarter the estimate was for a loss of 85 cents, but LDK reported $3.78 less than the estimate for a whopping loss of $4.63 per share.
In the last month the stock has fallen 28% and is below all the major moving averages. The most bullish case I can make for LDK is the stock has sold off so much that it's due for a dead cat bounce. Otherwise, unless your time horizon is over 10 years, LDK is dead money.
United States and China may start to go tit-for-tat with trade sanctions in the solar space, and trade wars always end the same way -- lots of losers and no winners. Investing in solar right now is like mowing grass in a field full of landmines; sooner or later it will end badly, and you will only have yourself to blame.
Granted, if solar makes a breakthrough in technology, prices could move higher in a quick hurry. But carbon-based energy is cheap and plentiful, so higher pump prices will not add sunshine into solar stocks in the near future. (See my article.)
Revenue year-over-year has fallen to $2.10 billion in the last fiscal year compared to $2.51 billion in the previous year. The bottom line also has falling earnings year-over-year of -$655.46 million last fiscal year compared to $290.8 million in the previous year.