NEW YORK (Reuters) - GT Solar International Inc SOLR.O, which saw its shares go down nearly 15 percent in afternoon trading on Friday, issued a statement saying news that one of its major clients had signed a contract with a Chinese competitor would have no impact on its business.
GT Solar, which went public on Thursday, said in a statement that the contract between its client LDK Solar Co LDK.N and its competitor, China-based JYT Corp, for furnaces would not affect its backlog of orders or projections.
LDK Solar represented 62 percent of GT Solar’s revenue in the fiscal year 2008.
Furnaces represented less than 8 percent of GT Solar’s order backlog with LDK Solar, according to the statement. GT Solar also said it would seek to continue diversifying its client base.
News of the contract had put pressure on GT Solar’s share price, said Sal Morreale, who tracks IPOs for Cantor Fitzgerald.
Another analyst said GT Solar’s poor performance in its debut made the stock more sensitive to such news.
“Given the severe bruising investors took from the debut of GT Solar yesterday, today’s statement about the LDK contract put fuel on an already burning fire, only to find out at a later time, it was less material than originally believed,” said Scott Sweet of IPO Boutique.
Since it began trading, GT Solar’s stock has been falling sharply. The company’s shares, which had priced at $16.50, in the middle of the estimate range, fell 11.6 percent in their first day of trading. In late trade on Friday they were down another 14.9 percent at $12.42.
Analysts had ascribed Thursday’s fall to the lower-than-expected earnings reported a day earlier by MEMC Electronic WFR.N, a major supplier of silicon wafers to the chip and solar industry, dragging down most solar stocks.
But MEMC Electronic was up nearly 7 percent on Friday. Other stocks in the solar energy sector were generally flat.
A larger problem might lay with the starting price, one analyst said.
“The IPO was overpriced,” said Ted Sullivan, a senior analyst with Lux Research, adding that the pricing gave GT Solar a market capitalization of about $2.5 billion, much higher than that of German competitor Centrotherm Photovoltaics CTNG.DE, with a market capitalization of about $1.2 billion.
Reporting by Phil Wahba, editing by Leslie Gevirtz