Energy stocks ended sharply divided Wednesday, with steep losses for solar stocks as investors expected a Donald Trump administration to favor traditional energy sources and to roll back policies that favored renewables.
”Trump would allocate more resources to traditional energy sectors (oil, gas and coal) than would Clinton, but allocate less to alternative energy industries,” Mickey Levy, chief economist for the Americas and Asia at Berenberg, wrote in a note.
T. Rowe Price analysts said Trump’s promise of an energy revolution, his antiregulation stance and vow to expand energy production including reviving the coal industry, might be favorable for the sector longer term.
“In a vacuum, more energy production is a good thing—more jobs, cheaper oil, cheaper gas,” Jeff Rottinghaus, manager of the U.S. Large-Cap Core Equity Strategy, wrote in an early note. “Less regulation could help energy investments because it could lower companies’ costs to pull resources out of the ground.”
Among solar-power installers, SolarCity Corp. SCTY, -4.03% which Tesla Motors Corp. TSLA, +1.34% is currently trying to acquire, closed down 4% on Wednesday. Rival Vivint Solar Inc. VSLR, -6.25% was among the biggest decliners, ending the day off 6.3%, while SunRun Inc. tumbled 4%.
Solar-panel makers and solar-power developers fared no better. SunPower SPWR, -14.17% skidded 14% and First Solar Inc. FSLR, +2.15% lost 4.2%. The American depositary receipts of China-based solar-panel manufacturer JA Solar Holdings Co. Ltd. JASO, -4.97% fell 8.4%; Trina Solar Ltd. TSL, -2.29% ADRs closed 2.3% down for the day.
The Guggenhim Solar ETF TAN, -5.57% was off 5.6%.
The U.S. solar industry has prospered over the last 8 years, said Angelo Zino, an analyst with CFRA. A Trump presidency along with a Republican-led Congress poses “significant risks” to a potential reduction/elimination of the federal tax credits for solar, extended at the end of last year, he said.