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- CEO Lyndon Rive collects more than grocery money with his 900,000 share sales in 2014.
- The company continues to generate losses.
- The company's business model is awkward if not wrong, more fad than solution.
SolarCity: Failure To Close The Electricity Loop Looms Large
- Rooftop solar panel consumers face higher charges for accessing the public utility grid.
- SolarCity admits the solar install thesis is greatly harmed with the proposed monthly fees by public utilities in California.
- The already high costs to sell solar systems is already a major problem prior to the recent slump in energy prices further questioning the competitiveness of solar.
- SolarCity has led the way in distributed solar financing, and has transformed the way financiers view distributed solar.
- SolarCity's recent financing deals with Bank of America Merrill Lynch and JPMorgan represent a growing trend of large-scale solar financing.
- While SolarCity's distributed solar lease/ppa model is still relatively young, these lease and ppa products are proving to be stable assets with predictable cash flows.
- SolarCity's ability to attract cheap capital has set the company apart from its competitors, and will be vital to its continued growth.
SolarCity Co-Founders Keep Dumping Stock, Should Investors Be Concerned?
- Since April 2014, SolarCity CEO Lyndon Rive and CTO Peter Rive have sold 1.7 million shares combined.
- I show that despite the massive selling, over 50% of the brothers' personal wealth is still tied to SolarCity.
- Moreover, chairman Elon Musk has not joined the selling and retains 22% ownership. About 12% of his wealth is in SolarCity stock.
- All in all, diversification looks like the most likely reason behind the insider selling. Nevertheless, insider activity during the following months will be critical to clarify the brothers' intentions.
- Recent collapse in natural gas prices is expected to heavily affect relatively-inefficient renewables like solar energy.
- SolarCity is expected to face major emerging threats both external and internal.
- Such threats include shale gas supply surge, expected customer defaults, diminishing government incentives and a decelerating housing market.
Does The Solar ITC Step Down Spell Doom For The Residential Solar Sector?
- The 30% solar investment tax credit (ITC) will be set to expire by the end of 2016, stepping down to 10% for residential solar companies.
- While the ITC step down will certainly affect the economics of residential solar, large residential solar corporations will continue to thrive.
- The ITC step down may actually help the top residential solar companies gain market share in the long run by pushing out smaller, less competitive residential firms.
- SolarCity's Solar Ambassador program will accelerate the company's referrals business, which constitutes for half of the company's business.
- The Solar Ambassador program has immense viral potential.
- SolarCity recently hired Jon Carson, a former Obama campaigner, to lead the Solar Ambassador program.
September 2014: The Month SolarCity Residential Rooftop Solar Beat The US Grid Everywhere
- Grid parity calculations need to be reexamined in light of recent reductions in total cost per Watt for residential rooftop solar PV installations.
- SolarCity claims of $2.90/W including installation and SG&A and the current 30% federal tax subsidy represent a critical confluence of parameters.
- The investment community may be underestimating the significance of SolarCity's current cost for the industry.
SolarCity: Rapid Growth In Rooftop Installation Makes It A Good Long-Term Investment
- The drop in the prices of PV modules will lead to an increase in the adoption of solar power in the U.S., opening up a big opportunity for SolarCity.
- By offering lease programs and solar bonds, SolarCity is making the right moves to tap this market.
- SolarCity is also looking to tap the commercial market, opening up another growth opportunity.
SolarCity: Market Share Dominance And Entry Into Promising Off-Grid Markets
- SolarCity's market share increased to 39% of the residential solar sector in the third quarter, primarily due to its unrivaled economies of scale, cost-structures and brand recognition.
- SolarCity's involvement in the startup Off-Grid Electric highlights the company's forward-looking nature.
- The off-grid market remains largely untapped and is perfectly suited for SolarCity's distributed model.
- SolarCity's retained value figure remains a heated point of debate.
Utility Rate Changes An Ominous Sign For SolarCity
- We expect utility rate structures to fundamentally break the residential solar lease company business model.
- The risks for SolarCity are outsized and we see mostly negative catalysts going forward.
- We are revising our view of SolarCity from Avoid to Sell.
- SolarCity has agreed to install solar panels on WalMart stores in 36 states in the next four years; this builds on 200 existing solar projects with WalMart since 2010.
- MW deployed and installed rose at a staggering rate, according to recent earnings; the company swung to profitability, as well.
- Analysts from Robert W. Baird, Canaccord, Needham, and Deutsche Bank have all upgraded or initiated coverage on Solar City with Buy/Outperform ratings YTD.
- We see the current dip in stock price, perhaps due to low oil prices, as a buying opportunity for a leading company with a bright future.
SolarCity: Cementing Brand And Presence Through MySolarCity App
- SolarCity's new app reinforces the company's position as an industry innovation leader.
- The MySolarCity app will help SolarCity enter mainstream consciousness.
- MySolarCity not only has practical and social utilities, but also long-term research functionalities.
- Given SolarCity's constant innovations, retained value and massive growth rate, the company's market capitalization is extremely undervalued.
Brad Buss And SolarCity's Promising Prospects After 2017
- Business reliance on tax incentives and lack of transparency are the two main concerns of SolarCity's shareholders.
- Starting in 2017, the incentive tax credit declines to 10%.
- Elon Musk has recently appointed his right-hand man Brad Buss to sort out these issues once and for all.
- We look at SolarCity's profitability after 2017. We implement a scenario analysis and arrive at a promising risk-reward proposition, with an average target price of $97.
- Long-term investors willing to accept substantial degrees of risk should consider taking a position.
Solar Growth Is Just Picking Up - SolarCity Stands To Benefit
- Total solar capacity will double in the next few years.
- SolarCity´s business model provides a visible revenue stream.
- SolarCity will gain a revenue boost from the Wal-Mart deal.
- Elon Musk has had a much more influential role in SolarCity than most people realize.
- The value that Elon Musk brings to SolarCity is not properly reflected in the stock value.
- SolarCity's dominant position will not change anytime soon, especially with a robust management team.
SolarCity: An Estimation Of Intrinsic Value Through Effective Earnings
- The management of SolarCity, the main US solar residential provider, claims retained value of $2.18B as of 3Q14, and the stock valuation has grown 5-fold since its IPO.
- However, questionable assumptions in the calculation of retained value, ever-growing quarterly losses, massive stock dilution and disappointing equity growth have resulted in 36% of the float being short.
- In this article, I show that because opex costs are expensed while revenues are capitalized over 20 years, GAAP figures are misleading.
- On the other hand, management's retained value metric greatly overstates shareholders' value.
- I instead propose a new metric of "effective earnings" and use it to calculate a target price for SolarCity.
Today, 2:09 PM
- Though WTI crude is still below $46/barrel and the Nasdaq is only up 0.3%, beaten-down solar stocks are posting big gains (TAN +3.9%). Quite possibly helping: Pres. Obama has said the U.S. will help finance an Indian effort to install 100GW of solar capacity by 2022.
- The head of an Indian think tank estimates such an effort would cost $160B. India says it's seeking $100B worth of investments over 7 years. The country's bureaucracy/red tape has often stalled major foreign investments; the new government has repeatedly promised to change that.
- First Solar (FSLR +4.1%) and SunEdison (SUNE +4.1%) are among the companies to have struck deals for Indian solar projects. SunEdison has announced plans to invest up to $4B in an Indian solar manufacturing plant through a JV. First Solar and Trina (TSL +5.4%) are weighing plans to build their own local plants.
- Other notable gainers: SCTY +4.7%. JKS +7.5%. SOL +5.8%. SPWR +2.9%. CSIQ +4.6%. JASO +4.4%. RGSE +3.7%. ASTI +9.3%. HSOL +3.2%. DQ +3.7%.
Thu, Jan. 15, 2:56 PM
- Yesterday's oil rally has proven short-lived: WTI crude is down $1.90 today to $46.58. With equities going in the same direction, solar stocks (TAN -3%) are having another rough day.
- SolarCity (SCTY -3.9%) and SunEdison (SUNE -6.9%) are also contending with target cuts from Canaccord's Josh Baribeau (to $64 and $26, respectively), who nonetheless maintains Buy ratings. "We are choosing to get slightly less aggressive on the riskier high-multiple names in the solar group as a result of growing macro uncertainty and business model changes in 2015."
- However, Baribeau "[remains] confident in SolarCity's momentum," and expects the company to generate "significant value" from its contracted assets in time. Q4 supply chain talks indicate U.S. residential solar demand remains "very strong."
- Regarding SunEdison, he's worried the company is "taking on a greater amount of execution and capital risk following announcements of potential manufacturing capacity and international joint ventures." But he still considers it "the world's leading renewable project developer, with a track record of executing."
- Fellow U.S. solar firms SunPower (SPWR -7%) and Vivint Solar (VSLR -7.6%) are also off sharply. Other industry names are seeing more modest declines, but still generally underperforming the Nasdaq.
Wed, Jan. 14, 9:21 AM| 23 Comments
Thu, Jan. 8, 1:15 PM
- Deutsche's Vishal Shah, bullish on solar for a long time, asserts the "recent volatility in solar stocks, driven largely by oil price weakness, presents an attractive entry point for investors as we expect 2015 to be a year of stable industry pricing and accelerating volume growth."
- Shah expects solar to see a "balanced supply/demand outlook as strong demand from the US and improving demand from China/other emerging solar markets offsets any potential demand weakness in the UK/Japan."
- He observes oil accounts for just ~5% of global electricity output, and sees both solar project pipelines/margins and module margins rising in 2015. Tariffs against Chinese module vendors are expected to be "completely removed."
- His top picks are SolarCity (SCTY +3.3%), SunEdison (SUNE +4.1%), SunPower (SPWR +6.1%), and Vivint (VSLR +0.3%); the first three are faring quite well today. Yingli (YGE +0.2%), however, has been downgraded to Hold due to balance sheet and financial flexibility concerns.
- Other major gainers: FSLR +3.9%. JKS +6%. ENPH +5.4%. CSIQ +3.7%. RGSE +5.2%. TERP +3.2%.
- SunEdison announced today it has bought new wind turbines that will allow it to build up to 1.6GW of wind projects that qualify for U.S. tax credits. The purchase follows the company's $2.4B deal to buy project developer First Wind.
- ETFs: TAN, KWT
Wed, Jan. 7, 7:33 AM
- SolarCity (NASDAQ:SCTY) is partnering with JPMorgan (NYSE:JPM) to finance more than $350M in solar power projects with a new investment fund.
- The fund is the second created by the two companies, and a follow-up to a fund created in 2013 to finance approximately $170M projects.
- JPM +0.9% premarket
- Previously: SolarCity, BofA partner on solar financing program (Dec. 11 2014)
Mon, Jan. 5, 1:18 PM
- WTI crude is down by $2.36 to $50.33/barrel, and briefly fell below $50/barrel for the first time since '09. Brent crude is down $3.18 to $53.24/barrel. Solar stocks, no stranger to getting hit hard by crude's decline, are seeing more pain (TAN -2.1%).
- U.S. solar firms First Solar (FSLR -5.5%), SolarCity (SCTY -5.9%), SunPower (SPWR -4.6%), SunEdison (SUNE -6%), and TerraForm (TERP -4.4%) are especially hard-hit. But other names are also underperforming: CSIQ -3.6%. DQ -5.1%. CSUN -4.2%. JKS -2.8%. SOL -3.5%. The S&P is down 1.8%.
- A reminder: Oil accounts for only ~1% of U.S. electricity production, and transmission/distribution costs often have a bigger impact on electricity prices than energy input costs.
- Industry news: 1) Canadian Solar has completed selling two 10MW Ontario plants to renewable energy investment firm RET. 2) Hanwha (HSOL +0.9%) has struck a deal to supply 80MW of modules for a Chilean solar plant. 3) China Sunergy has won a 30MW solar module contract from an Indian solar park builder.
Dec. 30, 2014, 10:27 AM
- SolarCity (NASDAQ:SCTY) CEO Lyndon Rive discloses he sold 100K shares on Christmas Eve at $56.61. 30K of the shares were obtained through the exercising of stock options priced at $1.62.
- Two weeks ago, CTO Peter Rive (Lyndon's brother and a fellow co-founder) disclosed the sale of 125K shares at $50.43, following the exercising of options to purchase 37.5K shares at $1.62.
Dec. 18, 2014, 12:18 PM
- While the Guggenheim Solar ETF is only modestly outperforming the Nasdaq (+2% vs. +1.6%), First Solar (FSLR +6.2%) and SolarCity (SCTY +6.9%) are posting big gains.
- Both names had tumbled in late November and early December, in tandem with plunging crude oil prices. More than a few bulls had argued the link between crude prices and solar demand is limited.
- Recent SA Pro articles on First Solar and SolarCity: I, II
Dec. 18, 2014, 9:29 AM
Dec. 17, 2014, 4:37 AM
- The Commerce Department is hiking import duties on solar energy equipment from China and Taiwan, closing a loophole that had allowed Chinese manufacturers to avoid tariffs and sell at illegally low prices in the U.S.
- Steep anti-dumping duties will now placed on imports of most solar panels made in China and solar cells from Taiwan, likely raising the cost of solar energy at a time of falling oil prices.
- Related tickers: FSLR, SPWR, SUNE, SCTY, CSIQ, SOL, YGE, DQ, ENPH, TSL, JASO, RGSE, JKS, CSUN, VSLR, HSOL , STP, OTC:MIDIL
Dec. 15, 2014, 7:54 AM
- The Q-50 Index houses those companies next-eligible for inclusion into the Nasdaq 100 (NASDAQ:QQQ). Amid the Nasdaq 100's annual changes which added and dropped three from the index, the Q-50's quarterly re-ranking adds and drops eleven.
- Added: Ainylam Pharma (NASDAQ:ALNY), Expedia (NASDAQ:EXPE), F5 Networks (NASDAQ:FFIV), JD.com (NASDAQ:JD), MercadoLibre (NASDAQ:MELI), Maxim Integrated (NASDAQ:MXIM), Old Dominion Freight Line (NASDAQ:ODFL), Shire (NASDAQ:SHPG), Splunk (NASDAQ:SPLK), Stratasys (NASDAQ:SSYS), United Therapeutics (NASDAQ:UTHR).
- Dropped: Avis Budget (NASDAQ:CAR), Cree (NASDAQ:CREE), First Solar (NASDAQ:FSLR), Golar LNG (NASDAQ:GLNG), Methanex (NASDAQ:MEOH), Melco Crown (NASDAQ:MPEL), Nuance (NASDAQ:NUAN), SolarCity (NASDAQ:SCTY). Also dropped are the three Nasdaq 100 additions: American Airlines, Lam Research, and Electronic Arts.
- Source: Press Release
- Previously: Who's in, who's out in annual change to Nasdaq 100 (Dec. 13, 2014)
Dec. 11, 2014, 9:20 AM
- SolarCity (NASDAQ:SCTY) has partnered with BofA Merrill Lynch (NYSE:BAC) to form a new investment program for financing an estimated $400M in solar power projects in 2014 and 2015.
- The new residential program follows BofA Merrill's prior commitment to finance more than $200M in commercial solar power projects with SolarCity, and is part of BofA's current 10-year, $50B environmental business goal to advance lower-carbon economic solutions.
- SCTY +0.5%, BAC +0.6% premarket
Dec. 5, 2014, 10:13 AM
- Given "almost no oil is used" to produce electricity in the U.S., weak oil prices will have no impact on the domestic electricity market, SolarCity (NASDAQ:SCTY) CEO Lyndon Rive told CNBC (video) yesterday evening. "If the [stock] market is reacting to the low cost of oil ... the market is just wrong."
- Rive did admit weak natural gas and coal prices have an effect, but added transmission and distribution infrastructure costs have a much bigger impact. To back up his point, he noted retail electricity prices have risen in recent years in spite of plunging natural gas prices.
- Rival Vivint Solar (VSLR +4%) is also rallying.
- Previous: Deutsche thinks oil will have "almost no impact" on solar
Dec. 2, 2014, 7:03 PM
- "We believe solar fundamentals are driven mostly by government policies and natural gas prices in most major markets and see almost no impact on near term demand environment as a result of recent oil price volatility," argues Deutsche's Vishal Shah, defending solar stocks after they were clobbered on Friday and Monday in the wake of OPEC's decision not to slash production.
- Shah expects strong 2015 solar demand in the U.S., China, and India, and thinks the U.S. market is especially well-insulated from falling oil prices, given local electricity prices are unlikely to drop near-term.
- He recommends buying SolarCity (NASDAQ:SCTY), SunPower (NASDAQ:SPWR), SunEdison (NYSE:SUNE), Trina (NYSE:TSL), and Vivint (NYSE:VSLR) on weakness. Shah, long a SolarCity bull, adds "improving financing costs and greater penetration in new states could continue to drive positive demand momentum" for SolarCity and Vivint.
- ETFs: KWT, TAN
Dec. 1, 2014, 12:15 PM
- With the Nasdaq down 1.3%, solar stocks are adding to the steep Friday losses they saw after OPEC declined to cut production, sparking a huge selloff in oil prices and anything energy/commodity-related. Oil prices have bounced a little today, but WTI crude is still only around $68/barrel.
- Solar bulls have noted oil only accounts for a small percentage of global electricity production, and that solar stocks have already seen plenty of pain this year. The Guggenheim Solar ETF (TAN -5.2%) is now down 34% from a March high of $51.07.
- Major decliners: FSLR -6.3%. SPWR -8.4%. SCTY -6%. SUNE -6.4%. SOL -12.8%.JKS -8.1%. CSUN -8.5%. CSIQ -9.3%. DQ -10.3%. VSLR -7.2%. TSL -7.8%. YGE -9.4%. RGSE -7.4%. HSOL -9.5%. TERP -5.8%. JASO -5.2%.
Nov. 28, 2014, 10:55 AM
- Solar stocks are getting hit hard (TAN -5.1%) after OPEC opted against cutting oil production, leading crude prices to plunge below $70/barrel and sparking huge selloffs in energy/commodity stocks. Fuel cell stocks aren't faring much better.
- Solar decliners: FSLR -6.8%. SPWR -6%. SUNE -5.7%. SCTY -2.9%. CSIQ -10.7%. SOL -9.1%. YGE -7.3%. DQ -7.2%. ENPH -6.8%. TSL -6.9%. JASO -7.5%. RGSE -3.9%. JKS -6.9%. CSUN -3.5%. VSLR -3.7%. HSOL -3.8%.
- Fuel cell decliners: BLDP -6.1%. FCEL -4.5%. PLUG -2.3%. HYGS -5.3%.
SCTY vs. ETF Alternatives
SolarCity Corp is engaged in designing, sales, engineering, installation, monitoring, maintenance and financing of solar energy systems to residential and commercial customers, and sale of electricity generated by solar energy systems to customers.
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