Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
First Solar Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial trajectory between 2019 and 2023 indicates a period of substantial value creation, characterized by a significant divergence between the market valuation of the entity and its invested capital.
- Market Value Trends
- The fair market value exhibited a strong upward trajectory, growing from approximately 4.9 billion US dollars in 2019 to a peak of nearly 17 billion US dollars in 2022. Although a slight contraction occurred in 2023, resulting in a value of 15.7 billion US dollars, the valuation remains significantly elevated compared to the 2019 baseline.
- Invested Capital Dynamics
- Invested capital remained relatively stable from 2019 through 2022, fluctuating within a range of 4.8 billion to 5.7 billion US dollars. A notable shift occurred in 2023, where invested capital rose sharply to 7.8 billion US dollars, indicating a significant increase in the capital base utilized to support operations.
- Market Value Added (MVA) Performance
- The MVA demonstrated extreme volatility and growth over the analyzed period. In 2019, MVA was marginal at 33 million US dollars, suggesting the market valued the company almost exactly at its invested capital. This figure escalated to 3.19 billion US dollars in 2020 and reached a peak of 11.9 billion US dollars in 2022. A reduction to 7.8 billion US dollars was observed in 2023, driven by the simultaneous decrease in market value and the increase in invested capital.
The substantial expansion of MVA through 2022 suggests that the market assigned a high premium to future growth prospects and intangible assets relative to the tangible capital employed. The correction observed in 2023 reflects a narrowing of this gap as the company expanded its asset base while the market valuation experienced a moderate decline.
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MVA Spread Ratio
First Solar Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 7,875,720) | 11,909,547) | 2,131,153) | 3,190,566) | 33,065) | |
| Invested capital2 | 7,840,426) | 5,054,301) | 5,692,249) | 5,111,222) | 4,894,577) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 100.45% | 235.63% | 37.44% | 62.42% | 0.68% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 370.13% | 119.87% | 2,219.60% | — | — | |
| Analog Devices Inc. | 117.77% | 103.56% | 117.94% | 210.89% | — | |
| Applied Materials Inc. | 671.06% | 515.59% | 815.05% | 555.54% | — | |
| Broadcom Inc. | 780.11% | 327.90% | 373.48% | 237.62% | — | |
| Intel Corp. | 136.50% | 56.17% | 138.47% | — | — | |
| KLA Corp. | 749.49% | 664.85% | 735.96% | — | — | |
| Lam Research Corp. | 511.21% | 404.85% | 617.13% | — | — | |
| Marvell Technology Inc. | 97.37% | 200.17% | 270.10% | — | — | |
| Micron Technology Inc. | 66.27% | 17.46% | 81.70% | — | — | |
| NVIDIA Corp. | 2,593.21% | 3,533.65% | 2,455.53% | — | — | |
| Qualcomm Inc. | 331.81% | 372.61% | 739.14% | 815.45% | — | |
| Texas Instruments Inc. | 565.70% | 853.39% | 887.48% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 7,875,720 ÷ 7,840,426 = 100.45%
4 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by significant volatility in market value creation relative to the capital invested. While invested capital remained relatively stable for the first four years of the period, the market's valuation of the company's value-added potential experienced extreme fluctuations, peaking in 2022 before undergoing a correction in 2023.
- Market Value Added (MVA)
- A dramatic upward trajectory is observed between 2019 and 2022, with MVA rising from 33,065 thousand US$ to a peak of 11,909,547 thousand US$. This surge indicates a substantial increase in the market's perception of the company's ability to generate value above its invested capital. However, a contraction occurred in 2023, with the figure decreasing to 7,875,720 thousand US$, representing a decline from the previous year's peak.
- Invested Capital
- Invested capital showed minimal variance between 2019 and 2022, fluctuating within a narrow range between approximately 4.9 billion and 5.7 billion US$. A significant shift occurred in 2023, where invested capital increased to 7,840,426 thousand US$, marking the highest capital deployment in the analyzed period.
- MVA Spread Ratio
- The MVA spread ratio exhibits extreme volatility, mirroring the fluctuations in MVA. Starting from a negligible 0.68% in 2019, the ratio climbed to 62.42% in 2020, dipped to 37.44% in 2021, and reached a maximum of 235.63% in 2022. This peak suggests that the market valued the company at more than double the amount of its invested capital. By 2023, the ratio normalized to 100.45%, a result of both the decrease in absolute MVA and the simultaneous increase in the invested capital base.
The divergence between the steady growth of invested capital and the volatile swings in the MVA spread ratio suggests that the company's market valuation was driven more by external market sentiment and future growth expectations than by linear increases in capital investment.
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MVA Margin
First Solar Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 7,875,720) | 11,909,547) | 2,131,153) | 3,190,566) | 33,065) | |
| Net sales | 3,318,602) | 2,619,319) | 2,923,377) | 2,711,332) | 3,063,117) | |
| Add: Increase (decrease) in deferred revenue | 797,243) | 910,129) | 64,079) | (160,923) | 216,886) | |
| Adjusted net sales | 4,115,845) | 3,529,448) | 2,987,456) | 2,550,409) | 3,280,003) | |
| Performance Ratio | ||||||
| MVA margin2 | 191.35% | 337.43% | 71.34% | 125.10% | 1.01% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | 944.62% | 297.25% | 836.71% | — | — | |
| Analog Devices Inc. | 422.86% | 388.08% | 757.72% | 685.43% | — | |
| Applied Materials Inc. | 449.88% | 297.74% | 520.10% | 422.74% | — | |
| Broadcom Inc. | 1,364.98% | 613.40% | 879.63% | 656.02% | — | |
| Intel Corp. | 231.83% | 78.99% | 155.07% | — | — | |
| KLA Corp. | 595.34% | 562.11% | 725.36% | — | — | |
| Lam Research Corp. | 448.84% | 298.83% | 497.72% | — | — | |
| Marvell Technology Inc. | 329.04% | 893.35% | 828.99% | — | — | |
| Micron Technology Inc. | 225.16% | 29.56% | 135.02% | — | — | |
| NVIDIA Corp. | 2,051.63% | 2,368.66% | 1,919.74% | — | — | |
| Qualcomm Inc. | 291.70% | 248.18% | 445.16% | 615.38% | — | |
| Texas Instruments Inc. | 729.45% | 748.35% | 793.86% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × 7,875,720 ÷ 4,115,845 = 191.35%
3 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by extreme volatility in market value creation contrasted with a steady recovery and growth in adjusted net sales. While sales have followed a consistent upward trajectory since 2020, the market's valuation of the company's added value has fluctuated significantly, reflecting shifting investor expectations and market conditions.
- Market Value Added (MVA)
- A substantial escalation in MVA occurred between 2019 and 2020, rising from 33,065 thousand US$ to over 3.19 billion US$. Following a moderate correction in 2021, the value peaked in 2022 at 11.91 billion US$, the highest point in the analyzed period. By the end of 2023, a contraction was observed, with MVA decreasing to 7.88 billion US$, though it remains orders of magnitude higher than 2019 levels.
- Adjusted Net Sales
- Adjusted net sales experienced a temporary decline in 2020, dropping to 2.55 billion US$ from 3.28 billion US$ in 2019. However, a consistent growth pattern emerged thereafter, with annual increases leading to a peak of 4.12 billion US$ by December 31, 2023. This indicates a stable expansion of the company's operational scale and revenue generation capabilities.
- MVA Margin
- The MVA margin exhibited high volatility, mirroring the fluctuations in total market value added. The margin transitioned from a negligible 1.01% in 2019 to a significant 125.10% in 2020. A peak was reached in 2022 at 337.43%, suggesting that the market valuation grew at a rate far exceeding the growth in net sales. In 2023, the margin compressed to 191.35%, reflecting a reduction in the market's valuation premium relative to the company's sales volume.
The divergence between the steady growth of adjusted net sales and the volatile swings in the MVA margin suggests that the company's market valuation has been driven more by external market sentiment and future growth expectations than by immediate linear revenue growth.
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