Analysts Questioning the Very Existence of SolarCity (NASDAQ:SCTY)

Analysts Questioning the Very Existence of SolarCity (NASDAQ:SCTY)

Analysts Questioning the Very Existence of SolarCity (NASDAQ:SCTY)

$SCTY

Last week SolarCity Corp. (NASDAQ:SCTY) reported Q-1 adjusted diluted net loss per share of 2.56 on revenues of $122.6-M. In the year-ago Quarter, the company reported a net loss per share of 1.52 on revenues of $67.48-M. The loss was deeper than expected, but what really hammered the stock’s price was the company’s guidance.

The company’s F-Y (full-year) forecast for new installations has dropped from a prior value of 1.25 gigawatts to a new range of 1.00 to 1.10 gigawatts. For Q-2 SolarCity expects to install 185 megawatts, a 2% decline compared with a year ago. The company now expects a net loss of 2.70 – 2.80 per share, way above the consensus estimate for a net loss of 2.13/per share.

Musk-Obama

The reaction from analysts and investors was fast

The share price dove 25% before recovering to a decliner of around 17%. Last Friday the stock was still down 13%.

Credit Suisse looked at the company’s results and said the weak guidance raised “Existential questions” for the company, meaning the investment bank is beginning to question the actual existence of SolarCity

SolarCity is faced with re-proving the merits of their business model each Quarter, facing either operational, regulatory, capital, or competitive challenges in addition to painfully causing significant ownership rotation. …and the capital challenges facing the company will force investors to re-evaluate the merits, and valuation, of it leadership and business.

While bookings were very soft (down 33% Y-Y), due to regulatory issues among other factors, SCTY noted some improvement. Saying, “We think reaching cost targets and positive cash flow by year-end will be Key. We view SCTY’s business as high risk given its need to continually raise capital.”

I believe SCTY shares are at a crossroad, seeing the flagging potential for spread capture (making money) in the residential solar business, and noting the lengthy capital recycling frames and a challenged ability to forecast.

congressional-leaders-argue-about-disaster-funding-as-government-shutdown-looms

I see no value in SolarCity. Elon Musk is the company’s largest shareholder.

Elon Musk’s SolarCity Bleeding Cash

The 52 wk trading range is 16.81 Vs 63.12

Symbol Last Trade Date Change Open High Low Volume
NASDAQ:SCTY 20.5 17 May-2016 0.44 20.18 20.87 19.81 4,467,500
HeffX-LTN Analysis for SCTY:  Overall Short Intermediate Long
Neutral (-0.20) Bearish (-0.26) Bearish (-0.29) Neutral (-0.06)

Stay tuned…

 

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

One Response to "Analysts Questioning the Very Existence of SolarCity (NASDAQ:SCTY)"

  1. Ivan   May 18, 2016 at 1:12 pm

    The model, relies on subsidies and eventhough it gets a 30% federal tax credit, a production tax credit, the sale of carbon credits and power purchase agreements that have a life cycle of 15 years plus they cannot manage the realtime cash requirements of the model. Investors are not patient enough nor should they be, given the uncertainty of future returns in a model that is in a constant state of flux.

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