A Day in the Sun: GT Solar’s Initial Public Offering

With interest in alternative energy and the stocks that lie behind it, solar stocks have been the focus of much discussion, debate, and speculation this year.  And last week, GT Solar International, Inc. (NASDAQ: SOLR) announced an initial public offering of 30.3 million shares of its common stock, priced at $16.50 a share.

Despite its mid-range pricing however, the stock fell the day after opening 13.71 percent, to $12.59 a share.  What is in store for this stock, and is it worth buying?  That depends on your view of the future of solar systems in this country and abroad, as well as your stomach for volatility.

The New Hampshire-based GT Solar manufactures photovoltaic (PV) fabrication lines and PV manufacturing equipment, and it also supplies reactors for silicon production. 

According to a press release from the company, GT Solar International “is a leading global provider of specialized manufacturing equipment and services essential for the production of photovoltaic wafers, cells and modules and polysilicon. The company’s principal products are directional solidification systems and chemical vapor deposition reactors and related equipment.”

GT Solar has been doing its thing since 1994, and in 2006 it entered the polysilicon production equipment market, with its Missoula, Montana-based Polysilicon Division.  So the company is clearly no newbie to this industry.  It knows its way around the solar landscape.

The fact is, though, solar is an industry that has yet to prove itself with consistent profits, stability, or predictability.  Even a company as solid and well-respected as GT Solar will have a difficult time convincing investors and the public that it’s a good investment at the moment.

In large part, investing in solar – or most any other alternative energy-related investment – is still a matter of faith.  Faith that the market, profits, and money will follow what science and common sense have been telling us for years:  that we must, and will, make “alternative” energies more mainstream.  The question is, how fast will that happen, and what should we do with our money between now and then?

If you’re an optimist, you’ll look at the initial offering of a company like GT Solar International as an opportunity to get in on the ground floor of a company that’s blazing ahead into the future.  If you’re more of a pessimist (or even a realist), you might wait to see if where we’re at now is the ground floor, or if we’re trying to get in the building a few flights up.

And as sure as the sun rises each day, we’ll eventually find out who was right.

Vivan Wagner
Analyst, Bourbon & Bayonets