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- SolarCity's new loan product is aimed at bypassing some of the limitations of the lease/PPA products.
- Unfortunately, the product is too convoluted and extends the already bad 20 year contract into a 30 year contract.
- We predict that this new product, along with the existing lease/PPA products, will cause considerable long term harm to customers and stock holders.
- SolarCity (SCTY) books are a mystery, so when will they be clarified?
- Are SCTY's projects profitable? If so, will they be profitable once 30% tax credits disappear?
- The company bleeds money and must borrow heavily, so what is their borrowing rate? Is it low enough, and will it stay low enough?
SolarCity: Undervalued In The Face Of Possible Obstacles
- SolarCity has been growing at an exponential rate due to the nature of its technology.
- SolarCity is in a prime position to take advantage of the solar revolution.
- Fears about the long-term viability of SolarCity's vertically integrated business model are overblown.
- SolarCity's retained value assumptions are reasonable.
- SolarCity's future potential market is massive.
SolarCity Unveils New Financing Option, Tax Credit
10 Reasons Why SolarCity, Vivint Solar, And RGS Energy Are Destined To Fail
- Solar installation business plans that assume utilities do not compete.
- We do not believe the collection/enforcement mechanisms will work as planned.
- To enhance shareholder wealth, we believe the these companies need to fundamentally restructure their lease/PPA products.
Big Moves In Solar Installer Business: SolarCity Goes Giga, While Vivint Solar Completes IPO
- Not just about solar PV panels on some houses; this is about changing the energy paradigm in the US.
- Connecting battery storage with solar PV is a core part of SolarCity’s plans.
- Conservative International Energy Agency report says solar PV unbeatable, biggest source of energy by 2050.
- Vivint Solar successful IPO; next kid on the block after SolarCity opened the market, but a more conventional business.
- Fears about increased competition have caused the stock price to fall over the last month, but we believe this fall will be temporary.
- Production facility in Buffalo will provide SolarCity with a massive advantage as the large-scale production of solar panels will result in cost reductions.
- Partnership with Tesla will give SolarCity a competitive advantage as its customers will enjoy back-up capacity in unfavorable weather conditions as well.
- The long-term growth prospects of the company remain strong, and we believe SolarCity will continue to grow.
- New York State will be building a solar manufacturing facility and equipping it to a tune of $750M for SolarCity and renting it to SolarCity for $1 a month.
- This is by far the sweetest such deal that we are aware of and is effectively a massive transfer of taxpayer money to a private entity.
- Silevo acquisition is complete but red flags remain.
- In September 2013, SolarCity purchased assets of Paramount Solar, a SolarCity strategic sales partner and a unit of Paramount Equity of Roseville, California.
- Tail-chasing revenue growth and shareholder return imperatives of a thick finance business model explain the decision to acquire Paramount Solar.
- Paramount Equity's checkered history in the state of Washington before and during the subprime lending crisis raises questions about SolarCity's business vision, goals, and methods.
- Analysts described Paramount Solar as a "closing machine", emphasizing the company's telemarketing talent, "the ability to sell a customer on solar's benefits and savings without meeting face-to-face".
- To create a durable business, SolarCity must adopt the peripheral vision of its customers and reimagine sales as a service enterprise committed exclusively to seeing the world through customer eyes.
SolarCity: Profile Of A Financially Engineered Post-Modern Corporation
- The solar power industry has experienced an identity crisis as it tries to determine the master it will serve: customers purchasing renewable energy systems or investors financing these systems.
- SolarCity is essentially a direct sales and marketing operation financially engineered out of the box, tuned for rapidly scaling operations, maximum customer growth, and long-term cash flow.
- Solar leasing companies have no incentive to reward customers with cost savings as the price of solar power drops.
- Ironically, the thick layer of costs associated with lease financing significantly increases the cost of customer acquisition, itself another soft cost.
- SolarCity cannot succeed in the long run without resolving contradictions created by a financing-heavy business model that places too many transactional layers and intermediaries between the company and its customers.
SolarCity: Aggressive Assumptions And Superficial Analysis Lead To Significant Overvaluation
- SolarCity fundamentals have not kept up with the stock performance since the IPO.
- Investors are relying on overly optimistic assumptions and are failing to analyze the company quantitatively.
- It will likely be several years before SolarCity is profitable, if ever.
- The company is dependent on favorable capital markets to operate and grow revenue.
- SolarCity stock is significantly overvalued at $67 per share and worth a fraction of the current price.
Is SolarCity The Quintessential Bubble Stock With Negative Catalysts To Boot?
- SolarCity has hit four out of five stages of economist Hyman P. Minsky's theory of financial instability. The fifth stage is the "panic" stage.
- SolarCity's stock price has dropped over 13% since their August 7th earnings report, and now Deutsche Bank believes SolarCity needs to issue a secondary.
- Technical analysis shows there is a head and shoulders pattern forming.
SolarCity: This Strong Gainer Can Still Deliver More Upside
- Focusing on efficiency will benefit SolarCity in the long-run.
- Reducing price of solar panels should boost SolarCity's margins.
- Solar energy is expected to become cost competitive in 22 states in the U.S. and this should also benefit SolarCity.
- The leasing market is expected to boom and this bodes well for SolarCity.
- SolarCity is a good buy despite its rich valuations.
- Baird downgraded SolarCity on valuation concerns.
- Firm still believes in upside with $83 target.
- Recent insider selling concerns are overblown.
- Short interest remains elevated.
- Pullback may provide an entry opportunity.
- The stock has gained about 36% since we last wrote about the company and predicted strong growth opportunities for SolarCity.
- The company has recorded some impressive revenue growth numbers over the last quarter.
- New strategy to offer loans for ownership of systems might affect the sales in the short-term, but the medium-long term sales will be stable.
- The solar energy market is still in the early stages and there is massive potential for the companies in this sector to grow.
SolarCity: An Analysis Of Retained Value And A Price Comparison Of Its Offerings
- SolarCity's retained value metric assumes 100% renewal rates.
- How likely a homeowner is to renew depends on various factors.
- Of the various SolarCity offerings, a fixed rate lease is probably best for the homeowner.
- SolarCity CEO Lyndon Rive stated they no longer expect to be cash flow positive for 2014. He added they will need additional working capital; a potential prelude to a secondary.
- SolarCity decreased revenue projections for the 3rd quarter to $55,000,000 vs. the 2nd quarter which came in at $61,000,000, missing analyst expectations.
- SolarCity increased their operating expense (OPEX) projections for the 3rd Quarter to $125,000,000 vs. $88,000,000 in the 2nd quarter.
- SolarCity increased their projections of EPS losses to ($1.25) for the 3rd quarter vs. am EPS loss of ($0.96) in the 2nd quarter.
- Between May 9th and August 4th, four (4) SolarCity board members had collectively sold 12,995,997 SolarCity shares.
SolarCity Projects Wider Losses And Less Revenue For Q3
- SolarCity reported a Non-GAAP net loss attributable to non-controlling interests and redeemable non-controlling interests of ($88,460,000) for Q2.
- Net loss per share for Q2 was ($0.96). SolarCity projects net loss per share for Q3 to come in at ($1.10)-($1.20). A near-20% increase in loss from Q2.
- For Q3, SolarCity projects GAAP operating expenses to come in at $115 million-$125 million. A near-20% increase in expenses in just one quarter.
- No details were provided on how the highly costly Silveo facility will be financed.
Wed, Oct. 15, 9:18 AM
- SolarCity (NASDAQ:SCTY) has filed to sell up to $200M worth of solar asset-backed debt to the general public. (prospectus)
- The bonds will be "available online through SolarCity's investment site to all U.S. investors who are at least 18 years old and meet SolarCity's eligibility requirements." The minimum purchase requirement is $1,000, maturities range from 1-7 years, and interest rates go up to 4%.
- SolarCity has already done multiple offerings of solar-backed notes aimed at institutional buyers, as it continues its aggressive expansion pace. A $500M convertible debt offering was launched last month.
- Shares -3.4% premarket, following equity markets lower.
Mon, Oct. 13, 4:09 PM
- Solar and fuel cell companies are among the biggest decliners on a day that saw NYMEX crude oil prices fall below $85/barrel (they're now slightly above), and Reuters report the Saudi government "will accept oil prices below $90 per barrel, and perhaps down to $80, for as long as a year or two." The Nasdaq as a whole finished down 1.4%.
- Of note: Oil only accounts for 1% of U.S. electricity production, and also a small percentage of electricity output in many other large economies.
- Solar decliners: SUNE -10.7%. FSLR -5.9%. SCTY -9.7%. DQ -9.4%. CSIQ -8.1%.JASO -7.7%. SOL -8.6%. TERP -7.5%. JKS -6.7%. CSUN -5.9%. VSLR -6.3%. TSL -8.7%. YGE -5%.
- Fuel cell decliners: FCEL -6%. PLUG -4.7%. BLDP -7.4%.
- Solar ETFs: KWT, TAN
Thu, Sep. 25, 10:41 AM
- SolarCity's (SCTY -3.8%) 2019 convertible senior notes, the sale of which was first announced on Tuesday, carry an interest rate of 1.625%, and a conversion price of $83.53 (a 38% premium to current levels).
- Net proceeds are expected to total $488.1M. Initial purchasers maintain a $75M overallotment option.
- Shares are taking part in a broader market selloff that has hit solar names hard. They rallied yesterday following bullish notes from Goldman and Roth.
Wed, Sep. 24, 12:22 PM
- Down AH yesterday after announcing a $500M convertible offering, SolarCity (SCTY +5.3%) is now up sharply with the help of bullish notes from Goldman and Roth.
- Goldman has reiterated a Conviction Buy and $96 target. It's pleased with the convertible offering, as well as the closing of the Silevo acquisition and the securing of $500M+ in financing from the NY state government for SolarCity/Silevo's planned 1GW+ module plant.
- Ground was broken in Buffalo yesterday for the plant, which is expected to go live in early 2016. SolarCity promises to invest $5B at the site (inc. payroll and opex) over the next 10 years, and to create 3K jobs. The NY government has committed $750M - $350M for building the plant, and $400M for equipment.
Tue, Sep. 23, 5:50 PM
- Continuing its financing/construction binge, SolarCity (NASDAQ:SCTY) is offering $500M worth of convertible senior notes due 2019. Initial purchasers will have a $75M overallotment option.
- At the end of Q2, SolarCity had $577.1M in cash, $246M in regular debt, $230M in convertible notes, and $53M in solar asset-backed notes.
- The company is relying on its breakneck capital-raising activity to hit a 2015 deployment guidance range of 900MW-1GW (up from 2014's 500MW-550MW). Eventually, it'll also need capital to build its planned 1GW+ solar module plant.
Tue, Sep. 23, 5:35 PM
Mon, Sep. 22, 1:45 PM
- High-beta tech stocks are selling off hard as the Nasdaq registers a 1.3% decline. The selling is broad-based, with Internet, solar, and enterprise tech stocks all well-represented among the ranks of major decliners.
- Major Internet decliners: BIDU -4.7%. ANGI -7%. YELP -5.9%. AWAY -5.1%. CHGG -5.9%. GRUB -5.8%. P -5.2%. Z -4.6%. TRLA -4.8%. ATHM -7.9%. BITA -7%. DANG -5.9%. WB -5.3%.
- Solar: FSLR -4.5%. SCTY -7.5%. SPWR -4.5%. DQ -7.6%. JKS -5.5%. ASTI -6.3%. ENPH -5.5%. CSIQ -4.8%.
- Enterprise: WDAY -5.4%. GIMO -6.7%. VMEM -7.7%. IMPV -4.8%. MKTO -4.9%. SPRT -5.1%. CSOD -5.5%.
- Others: HIMX -4.6%. SIGM -5.6%. WATT -9.7%. CYNI -5.3%. ADNC -5.7%. PXLW -5%. SWIR -5.8%. MITK -6%. OCLR -6%.
Thu, Sep. 4, 1:51 PM
- Making good on an August Bloomberg report, China's National Energy Administration (NEA) has called on local governments to identify and support distributed solar projects in their realms.
- As previously reported, extra subsidies will be encouraged for rural and government projects, public infrastructure installations will be promoted, and financial firms have been told to offer discounted loans.
- The NEA is trying to hit an 8GW 2014 distributed solar installation target in spite of a slow start to the year. Its target for utility-scale projects stands at 6GW.
- Several Chinese solar stocks are rallying, as are a few non-Chinese names. YGE +5.1%. CSIQ +3.6%. JASO +3.8%. TSL +2.3%. SOL +2.1%. HSOL +5.2%. DQ +4.7%. ENPH +6.6%. ASTI +6.1%. RGSE +2.8%. SolarCity (SCTY +5.1%) is up after announcing plans to open 20 new operations centers.
- Solar ETFs: KWT, TAN
Fri, Aug. 8, 4:36 PM
- Though four firms have hiked their SolarCity (SCTY -7.3%) targets after the company posted mixed Q2 results and reiterated its deployment guidance, investors opted to take profits.
- One possible concern: CEO Lyndon Rive mentioned on the CC (transcript) SolarCity no longer expects to be cash flow positive for 2014, as it continues ramping investments to grow its customer base.
- "With Q2 bookings much better than expected, we expect bookings to accelerate into Q3 given the backdrop of a robust US market," says Roth's Philip Shen, hiking his PT by $18 to $98. He's also impressed with SolarCity's realized value and opex per watt, and notes it has set a 2017 installation cost target of $1.90/watt (down from Q2's $2.29/watt).
- Goldman's Brian Lee (PT hiked by $4 to $96) notes activity outside of the "key states" of California, Hawaii, and Arizona is lifting bookings growth (+216% Y/Y), and expects "the closing of the Silevo acquisition and a potential financing deal for a N.Y.-based manufacturing facility to serve as positive catalysts."
- Shares still +23% YTD.
Thu, Aug. 7, 10:05 AM
- SunEdison (NYSE:SUNE) recognized revenue from 54MW of solar systems in Q2, below guidance of 60MW-80MW. But it also retained 164MW on its balance sheet, better than guidance of 100MW-120MW.
- The company now expects to finish 1GW-1.15GW of solar systems in 2014, at the high end of prior guidance of 900MW-1.15GW. Revenue is expected to be recognized from 290MW-310MW (down from 460MW-580MW), and 710MW-830MW are expected to be retained (up from 440MW-570MW).
- In addition, SunEdison forecasts average 2014 project pricing of $2.50-$3.00/watt, better than prior guidance of $2.40-$2.75. That's providing a lift to EPS, which beat consensus by $0.40 in Q2.
- Solar project pipeline rose by 700MW Q/Q in Q2 to 4.3GW, and backlog by 100MW to 1.1GW. 475MW of the pipeline is under construction, up from 463MW at the end of Q1 and 200MW a year ago.
- Gross margin was 4.6% vs. 3.8% in Q1 and 5.9% a year ago. An aggressive construction pace led free cash flow to total -$80.2M. SunEdison ended Q2 with $954.7M in cash/equivalents, and $5.39B in debt. ~$3.5B of the debt is directly tied to solar systems financing.
- Peers SunPower (SPWR +4.2%) and SolarCity (SCTY +2.8%) are also rallying. SolarCity reports after the bell.
- Q2 results, PR
Fri, Aug. 1, 12:26 PM
- Solar stocks are underperforming (TAN -4%) amid a market selloff after SunPower (SPWR -8.5%) posted mixed Q2 results and provided Q3/2014 guidance ranges with midpoints below consensus.
- SunPower also announced it's building a new plant (Fab 5) that could go live in 2017 and eventually produce 700MW+/year of modules, boosting its capacity by over 50%. "Our share has been in single digits for a while and demand for the last 24 months suggests that we can expand share," says CEO Tom Werner.
- The announcement comes 6 weeks after SolarCity (SCTY -3.5%) unveiled plans to build a 1GW+ module plant with newly-acquired Silevo's help, and said it will later build "one or more significantly larger plants at an order of magnitude greater annual production capacity."
- Minimal capacity investments, together with rising U.S./Asian demand, have helped module prices stabilize following gut-wrenching declines in prior years.
- Also: SunPower stated on its CC (transcript) it hasn't decided whether to create a solar project YieldCo similar to SunEdison's (SUNE -4.3%) TerraForm Power (TERP -4.7%), which recently turned in a strong IPO. "It does not look like the company is likely to make a decision anytime soon," says Raymond James.
- Nonetheless, Brean has upgraded SunPower to Buy, citing optimism about strong demand and healthy pricing.
- Other notable decliners: FSLR -3.6%. TSL -8.4%. JKS -6%. CSIQ -5.6%. CSUN -5.7%. YGE -5%. SOL -4.5%. ENPH -5.8%. RGSE -4.5%. HSOL -3.9%. JASO -4.4%.
Mon, Jul. 28, 7:59 AM
- Solar names are under pressure following the U.S. government's move to place anti-dumping duties as high as 165% percent on solar panels and cells from China.
- China condemns the action, saying "if escalating problems in the China-U.S. solar industry are ignored, in the end it will damage up and downstream industries in both countries."
- Moving sharply lower premarket: YGE -5.1%, CSIQ -4.3%, JKS -3.8%, TSL -2.7%, JASO -2.5%, SCTY -2.2%, HSOL -4.9%
- Moving up: SPWR +1.8%, FSLR +2.7%.
- ETFs: TAN, KWT
Mon, Jul. 14, 1:38 PM
- WTO judges have ruled the U.S. imposition of tariffs on Chinese solar modules, steel products, and other exports violates global trade rules.
- Though rejecting some Chinese arguments against U.S. tariffs, the judges ultimately ruled the tariffs are inconsistent with obligations under the 1994 Marrakesh accord.
- The U.S. originally imposed tariffs on Chinese solar module exports in 2012, and followed up last month by slapping new preliminary tariffs meant to close a loophole related to the use of non-Chinese cells.
- Chinese solar stocks are rallying on an up day for equities: YGE +4.8%. SOL +3.1%. CSUN +5.5%. TSL +2.6%. JKS +2.8%.
- SolarCity (SCTY +2.4%), which relies heavily on Chinese module imports (that might change in a few years), is also higher.
- Solar ETFs: KWT, TAN.
Tue, Jul. 8, 10:08 AM
- OTR Global reports the Chinese government is thinking of cutting its 2014 solar installation targets due to credit availability issues.
- The government previously set a 2014 installation target of 14GW (8GW distributed systems, 6GW utility). Deutsche has already expressed doubts about its feasibility following a soft Q1.
- U.S. and Japanese shipments have been faring better, but new DoC tariffs could take a toll on near-term Chinese sales to the former market.
- Solar stocks are lower amid a market selloff: YGE -5.3%. CSIQ -4.7%. SCTY -3.5%. FSLR -3.5%. SPWR -3.2%. JKS -4.6%. HSOL -4.4%. SOL -3.5%. DQ -3.4%. CSUN -5%. TSL -2.7%. ENPH -3%.
- Solar ETFs: KWT, TAN
- Update: OTR's note comes amid a report the Chinese government plans to hike its subsidies for power sales stemming from rooftop solar projects by up to 55%, putting their revenue (on a per-kWh basis) on par with ground-mounted projects.
Wed, Jul. 2, 9:49 AM
- Canaccord has launched coverage on SolarCity (SCTY +4.4%), SunEdison (SUNE +1.2%), Canadian Solar (CSIQ +2.3%), and RGS Energy (RGSE +4.7%) with Buy ratings.
- SunPower (SPWR +0.6%) is up slightly in spite of being started at Hold.
- Canaccord's Josh Baribeau predicts the solar industry as a whole will benefit as "financial innovation such as risk pooling, securitization, de-levering etc. continue to drive the costs of capital and system costs downward."
- Baribeau expects SolarCity ($94 PT, leading the securitization trend) to beat Street deployment estimates, and to see strong cash flow growth with the help of declining component and financing costs.
- He likes Canadian's low manufacturing costs, industry-leading commercial backlog, and relatively low Chinese sales dependence. His target is $43, or 10x 2015E EPS.
- Solar ETFs: KWT, TAN
- Previous: Deutsche upbeat on solar YieldCo potential
Mon, Jun. 23, 5:37 PM
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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