Should I buy First Solar stock as Biden bans Chinese polysilicon imports?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 22, 2021
  • President Biden is considering banning Chinese polysilicon imports.
  • The world’s largest supplier of solar-making material is said to use forced labor in Xinjiang.
  • First Solar invested $680M to a new panel building as it looks to re-shore manufacturing. Time to buy?

First Solar Inc. (NASDAQ:FSLR) could significantly benefit if President Joe Biden bans Chinese polysilicon imports. The Arizona-based company recently committed to invest $680 million in a panel building in Ohio after revealing plans to re-shore its manufacturing operations.

First Solar shares gained more than 115% between 22nd June last year and 21st January this year. The stock has since pulled back more than 27% amid growing tensions related to labor practices in Xinjiang. 

How do sanctions on Chinese polysilicon imports impact First Solar?

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News that Biden could ban Chinese polysilicon imports to the US put FSLR in a solid position to benefit. There are concerns that China’s biggest city for polysilicon manufacture Xinjiang, maybe using forced labor from detained Uighur Muslims. The likes of Nike Inc. (NYSE:NKE) and the UK’s Burberry Group Plc (LON:BRBY) faced backlash in China in March after making statements against labor practices in Xinjiang.

Therefore, Xinjiang will have the option to either revise its labor laws, thereby leading to a higher cost of labor, or stick to current practices and risk losing the market to other countries like the US.

Foreign companies that offshored their manufacturing operations to China because of cheap labor may also have to re-shore. First Solar looks poised to benefit from the reshoring migration after making a significant investment. Furthermore, Biden has indicated his dream of placing the US on a path to eliminate carbon emissions. Therefore, FSLR will have a ready market once it re-shores its operations. 

Source – TradingView

Technical overview

Technically, FSLR share price appears to be on a downward movement after peaking in January. The stock price plunged after reporting earnings at the end of April. It has since recouped some of the losses. However, the rebound could benefit from recent news about its plans to restore coupled with Biden’s planned ban on Chinese polysilicon imports.

Investors looking to benefit from the current progression in the stock price can target profits at approximately $88.85 and $98.15. The key support levels are $68.54 and $59.80.

Bottom line: First Solar is perfect for a long term buy

The FSLR rebound looks exciting, but even more compelling is its long-term future. The company’s reshoring plans could benefit significantly if President Biden proceeds with banning Chinese polysilicon imports. 

Therefore, the stock makes both a perfect rebound buy and a long-term investment. Now could be the time to buy FSLR shares.

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