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Summary

  • Four insiders sold SolarCity stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • 2 of these 4 insiders decreased their holdings by more than 10%.

SolarCity Corporation (NASDAQ:SCTY) designs, installs, and sells or leases solar energy systems to residential and commercial customers, and government entities in the United States.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of SolarCity's insider activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Lyndon RiveCEOApril 29160,000Yes2,679,069 shares5.6%
Seth WeissmanEVPApril 227,000Yes158,777 shares + 55,816 options3.2%
John StantonVPApril 110,000Yes0 shares + 53,280 options15.8%
Linda KealaEVPApril 14,786Yes13,066 shares + 26,000 options10.9%

There have been 181,786 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of SolarCity's insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
April 2014181,7860
March 201437,0000
February 201417,0000
January 201417,0000
December 2013144,2160
November 201300
October 20130429,737
September 201300
August 201300
July 201300
June 201300
May 201300
April 201300
March 201300
February 201300
January 201300

There have been 397,002 shares sold, and there have been 429,737 shares purchased by insiders since January 2013. The month of April 2014 has seen the most insider selling.

Financials

SolarCity reported the full-year 2013 financial results on March 18 with the following highlights:

Revenue$163.8 million
Net loss$55.8 million
Cash$577.1 million
Debt$636.9 million

The four insiders sold their shares after these results.

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(Source: Earnings presentation)

Outlook

SolarCity's first-quarter 2014 guidance is as follows:

(click to enlarge)

(Source: Earnings presentation)

SolarCity's full-year 2014 guidance for MW deployed is between 475 MW and 525 MW. SolarCity also expects to generate positive cash flow for the full-year 2014.

Competition

SolarCity's competitors include SunPower Corporation (NASDAQ:SPWR), and SunEdison (NYSE:SUNE). Here is a table comparing these companies.

CompanySCTYSPWRSUNE
Market Cap:4.82B4.06B5.16B
Employees:4,2626,3206,300
Qtrly Rev Growth (yoy):1.01-0.06-0.08
Revenue:163.84M2.51B2.01B
Gross Margin:0.240.200.09
EBITDA:-106.43M259.70M9.60M
Operating Margin:-0.900.06-0.13
Net Income:-55.79M95.59M-593.50M
EPS:-0.700.70-2.46
P/E:N/A47.88N/A
PEG (5 yr expected):0.500.86-16.88
P/S:29.541.612.50

SolarCity has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider activities this year.

CompanyInsider buying / sharesInsider selling / shares
SPWR0171,789
SUNE00

Only SolarCity has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling SolarCity, and there have not been any insiders buying SolarCity during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. SolarCity has an insider ownership of 73.30%.

Before going short SolarCity, I would like to get a bearish confirmation from the Point & Figure chart. The three main reasons for the proposed short entry are a relatively high P/S ratio, negative earnings, and the intensive insider-selling activity.

Source: SolarCity: 4 Different Insiders Have Sold Shares This Month