Why JinkoSolar Fell Today

Key Points

• President Trump made comments slamming the solar and wind industries today.

• These comments have increased the prospects on further restrictions for solar projects, even beyond the removal of tax credits earlier this year.

• Jinko has a high dividend, but its results are highly volatile.

• 10 stocks we like better than JinkoSolar ›

Shares of JinkoSolar (NYSE: JKS) fell hard on Thursday along with the rest of the solar sector, with Jinko down as much as 6.2% before recovering to a 4.3% decline on the day.

The entire solar sector took a hit today, perhaps due to marketwide uncertainty over interest rates and inflation, which tends to heavily affect solar stocks. However, the bulk of the declines were likely due to comments by President Trump, who threatened to stop any solar project approvals in the U.S. going forward.

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"We will not approve wind or farmer destroying Solar"

In a post on his social media platform Truth Social, President Trump posted on Wednesday:

Any State that has built and relied on WINDMILLS and SOLAR for power are seeing RECORD BREAKING INCREASES IN ELECTRICITY AND ENERGY COSTS. THE SCAM OF THE CENTURY! We will not approve wind or farmer destroying Solar. The days of stupidity are over in the USA!!! MAGA

Although the post was made yesterday, it appears major news publications picked up on the potential consequences today. Additionally, JinkoSolar rival Canadian Solar (NASDAQ: CSIQ) posted worse-than-expected earnings today, highlighting a potential slowdown in Chinese solar deployments in the second half relative to the surge seen in the first half. Jinko is listed on the New York Stock Exchange but is a Chinese company with a base of operations in China and a significant amount of its sales going to Chinese projects.

However, Jinko also sells into the U.S., with 5% of its first-quarter module sales going into the U.S., and a 2GW module manufacturing facility up and running in the U.S. as well.

Image source: Getty Images.

Is Jinko worth a look for value investors?

If there were a ban on new solar projects, there are certainly risks to Jinko's U.S. sales and perhaps a risk of stranded capacity for its manufacturing operations in the U.S. too -- though modules from that facility could potentially be sold to other countries in the Western Hemisphere.

Given its relatively low U.S. exposure today, Jinko's stock may appear tempting on this downturn, especially with its sky-high 5.5% dividend yield. However, investors should be aware it can be a very cyclical and low-margin business, with its first-quarter revenue down some 40% relative to the prior year, and its profits swinging to losses. So despite the seemingly cheap valuation, Jinko makes for a risky play at this point.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.