What happened
Shares of FTC Solar (FTCI +7.54%) fell as much as 35.7% in early trading on Tuesday after reporting first-quarter 2021 financial results. Shares did bounce back and closed the day down just 12.8%, but that's still a rough performance for the stock.
So what
FTC Solar reported $49.6 million in revenue for the quarter, which was down from $65.7 million a year ago. Net loss also jumped from $7.4 million to $27.8 million, or $0.28 per share.
Image source: Getty Images.
What's shocking is that the gross margin was a negative 18.7%, and management expects the second-quarter 2022 non-GAAP gross margin to be negative 19% to negative 29%. There's simply no way to make a profit in that kind of environment, and FTC Solar doesn't seem to have any pricing power in today's market.
NASDAQ: FTCI
Key Data Points
Now what
The market's negative reaction to some earnings reports has been harsh this year, but in this case, I'm surprised the stock didn't stay down. I don't see a path to better profitability, and FTC Solar can only survive for so long given the current level of losses. I am bullish on the growth in solar energy stocks longterm, but that doesn't mean every company will be a winner, and this is one I am certainly not buying after today's drop.
