Despite all the hype and growth potential surrounding the solar energy industry, the sector as an investment has been a real dud. The Invesco Solar ETF (TAN) has been around since 2008 and since its launch the fund has lost more than 80% of its value.
Granted, most of those losses came during the first year or two of its existence. Even if you bought into the fund at the beginning of 2010, you’re still down about 66%. Any way you look at it, solar energy investing has been a money losing proposition.
2019 has been a different story though. TAN is up more than 35% year-to-date giving renewed hope to those who are considering in the sector’s future potential again. However, now doesn’t look like the best time to be dipping your toes in the water.
Solar stocks are now entering what is traditionally their worst performing stretch of the year. Over the fund’s 11-year history, TAN has averaged a loss in every month from May through November. Historically, all of the fund’s gains have come between December and April. Sell in May and go away indeed!
The more impactful news for the sector is Tesla’s announcement that it’s going to cut solar panel prices by around 38%. Solar energy companies aren’t big money makers to begin with and if they get engaged in a price war with Tesla their margins are going to take a big hit.
So far, TAN has taken the Tesla news in stride but this looks like an optimal time to sell the rip.