NEW YORK (Reuters) – GT Solar International Inc's (SOLR) shares were down nearly 12 percent in afternoon trade in the solar energy equipment maker's market debut on Thursday, a day after its initial public offering priced at the mid-point of the forecast range.
“We're really positioned for the long term, we're not so focused on the day to day fluctuations,” GT Solar's chief executive Tom Zarrella told Reuters, who added that he thought the company's order backlog of $1.5 billion made it attractive.
The stock's debut came as the broader U.S. market slid almost 2 percent. After MEMC Electronic (WFR.N: Quote, Profile, Research, Stock Buzz), a supplier of silicon wafers to the chip and solar industries, announced disappointing earnings on Wednesday, its shares tumbled nearly 18 percent Thursday, dragging down the solar sector.
“That put pressure on GT Solar's stock,” said Scott Sweet, an analyst with IPO Boutique.
Investors have shunned solar stocks in recent weeks due to concerns about cuts or the elimination of government subsidies in Spain and the United States and a weakening global economy that could hamper demand for renewable energy sources.
GT Solar's market debut was no exception. The stock was down $2, or about 12 percent, at $14.55 in mid afternoon trading after pricing at $16.50 per share, within its estimated range of $15.50 and $17.50 a share.
The stock hit a low of $14.05 earlier in the session.
The Merrimack, New Hampshire-based company sold 30.3 million shares owned by stockholders GFI Energy Ventures LLC and Oaktree Capital Management LP for about $500 million.
The company does not plan to pay dividends on its common stock for the foreseeable future, other than the $90 million dividend to be paid to existing shareholders.
That the IPO's proceeds are going to stakeholders rather than the company itself is one reason for the stock drop, according to one IPO watcher.
“They priced it too high. Investors don't like a $600 million bailout with nothing going to the company,” said Francis Gaskins, president of IPOdesktop.com. “But if you were in their shoes you would be happy to cash out.”
GT Solar's first day performance could put a damper on future renewable energy IPOs this year.
“Clean energy can be robustly healthy, but if the funds are retrenching back away from growth stocks and towards defensive plays then there just isn't the liquidity in the market to support a big IPO,” said Michael Liebriech, chief executive of research firm New Energy Finance. “I'm not bullish, I'm going to be honest.”
According to data from Dealogic, GT Solar's debut is the worst performer among the largest ever solar IPOs in the U.S., all of which have taken place in the past two and half years.
Suntech Power (STP.N: Quote, Profile, Research, Stock Buzz) shares rose 41 percent in their 2005 debut, while First Solar Inc (FSLR.O: Quote, Profile, Research, Stock Buzz) was up 23 percent in 2006, and JA Solar Holdings Co Ltd (JASO.O: Quote, Profile, Research, Stock Buzz) by 19 percent in early 2006. LDK Solar Co Ltd (LDK.N: Quote, Profile, Research, Stock Buzz), one of GT Solar's biggest clients, was flat in its debut in 2007, while Yingli Green Energy Holding Co Ltd (YGE.N: Quote, Profile, Research, Stock Buzz) fell by about 4 percent last year.
(Reporting by Nichola Groom in Los Angeles, Christian Plumb and Phil Wahba in New York; Editing by Tim Dobbyn, Leslie Gevirtz)