…is still going up!
Once again I find myself puzzled at the meteoric rise of solar companies valuations. From 6.6times sales to 58 times revenues, whichever measure you pick, its in the stratosphere.
However we can see some people getting nervous and others “smoking out” the commodity plays. Those companies which are depending on a purely logistical advantage are being whacked back down when they underperform on margin. Those companies which are showing more mature business strategies are continuing their rise. And those which are showing innovative approaches (a la horses for courses) are continuing very very strong gains.
Who gets left behind? The bottom dwellers. The ones who have not much of a plan yet can still make sales. Those who have a “me too” plan. Those who depend solely on chinese cost advantages (temporarily). These companies have no future. They will be swamped by innovation shortly. They will simply have no place to turn. As the market gets smarter (and wise to them) they will disappear. Who am I talking about? Mostly asian companies who thought that simply “being in solar” was enough to be successful. Those that launched me-too products figuring that there is a sucker born every minute.
We see dozens upon dozens of portable solar chargers, standard solar modules,etc. coming out of China today in the consumer market. Still nobody gets it. The customer is getting wiser and is having more choice. Get wise or get out.
In a sense, this is simply a sign of a maturing market. What happens then? The crazy rises will temper. They will perhaps even pull back for a while. Yet the “boat has left the port” when it comes to solar and the future is only going to get better for those that have a real knack to innovate, develop and sustain.
Sass