T1 Energy Inc. (T1) finds itself at the center of a high-stakes dispute over U.S. solar tax credits, with shares experiencing significant volatility this week. The company closed at $8.72 on Thursday, up 0.23%, following a dramatic 25% surge on Wednesday. Trading volume soared to 79.1 million shares, nearly three times the three-month average, as investors digested a short-seller report and a bullish analyst response.
The controversy centers on the foreign entity of concern (FEOC) rules, which determine eligibility for Section 45X tax credits under the Inflation Reduction Act. These credits, valued at up to $2.4 billion for T1 Energy, are designed to incentivize domestic solar manufacturing and restrict benefits from entities linked to China.
Short seller Fuzzy Panda Research alleged on May 19 that T1 Energy's ties to China's Trina Solar, through an intellectual property licensing deal with Evervolt in Singapore, could jeopardize its FEOC compliance. The firm also flagged $41.4 million in first-quarter tax-credit accounting as a potential red flag. In response, T1 Energy reiterated in its quarterly filing that it believes it remains compliant with FEOC rules and expects to qualify for the credits.
Roth Capital analyst Philip Shen defended the company, calling it "a model" for onshoring advanced solar technology and suggesting the recent selloff presented a buying opportunity. Shen's comments provided a counterbalance to the bearish narrative, helping to stabilize the stock after its sharp gains.
Despite the controversy, T1 Energy reported solid first-quarter results, with net sales of $177.6 million, net income from continuing operations of $3.9 million, and record adjusted EBITDA of $9.1 million. The company also provided updates on its Texas manufacturing expansion, with CEO Dan Barcelo confirming that the G2_Austin solar cell plant remains on track for first output in the fourth quarter of 2026. CFO Evan Calio stated that expected funding would be "more than sufficient" to cover the remaining $225 million in phase one capital expenditures.
Looking ahead, T1 Energy maintained its 2026 output target of 3.1 to 4.2 gigawatts from its G1_Dallas plant. The company held $123.7 million in cash as of March 31 and raised approximately $174.7 million through a convertible note sale in April. However, it faces several challenges, including $31.7 million in customs bills, $33.5 million in pending tariff refunds, and requests from the DOJ and SEC regarding stock sales by an executive and board member. Additionally, T1 Energy disclosed a material weakness in its internal controls over revenue, inventory, and IT systems.
With U.S. markets closed Monday for Memorial Day, Friday's trading may reflect positioning ahead of the long weekend. The FEOC dispute remains the central focus, with bulls betting on T1 Energy's compliance and growth story, while bears warn of potential risks to the tax credits that underpin the company's valuation.