SolarCity: 4 Different Insiders Have Sold Shares This Month

Apr.30.14 | About: SolarCity Corp. (SCTY)

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.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Lyndon Rive CEO April 29 160,000 Yes 2,679,069 shares 5.6%
Seth Weissman EVP April 22 7,000 Yes 158,777 shares + 55,816 options 3.2%
John Stanton VP April 1 10,000 Yes 0 shares + 53,280 options 15.8%
Linda Keala EVP April 1 4,786 Yes 13,066 shares + 26,000 options 10.9%
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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.

Month Insider selling / shares Insider buying / shares
April 2014 181,786 0
March 2014 37,000 0
February 2014 17,000 0
January 2014 17,000 0
December 2013 144,216 0
November 2013 0 0
October 2013 0 429,737
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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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
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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:

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(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 (SUNE). Here is a table comparing these companies.

Company SCTY SPWR SUNE
Market Cap: 4.82B 4.06B 5.16B
Employees: 4,262 6,320 6,300
Qtrly Rev Growth (yoy): 1.01 -0.06 -0.08
Revenue: 163.84M 2.51B 2.01B
Gross Margin: 0.24 0.20 0.09
EBITDA: -106.43M 259.70M 9.60M
Operating Margin: -0.90 0.06 -0.13
Net Income: -55.79M 95.59M -593.50M
EPS: -0.70 0.70 -2.46
P/E: N/A 47.88 N/A
PEG (5 yr expected): 0.50 0.86 -16.88
P/S: 29.54 1.61 2.50
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SolarCity has the highest P/S ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
SPWR 0 171,789
SUNE 0 0
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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.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.