Elon Musk’s SolarCity (NASDAQ:SCTY) “Bleeding” Cash

Elon Musk’s SolarCity (NASDAQ:SCTY) “Bleeding” Cash

Elon Musk’s SolarCity (NASDAQ:SCTY) “Bleeding” Cash


SolarCity Corp. (NASDAQ:SCTY) will continue its downtrend (sentiment has turned Bearish), as largest US rooftop solar developer loses money on every installation.

Expert managed money sees SolarCity getting into financial trouble in Y 2016. One analyst dubbed SolarCity a “Subprime” finance company, and said its customers will be unhappy with their existing leases as solar panel prices decline.

Late Monday, SolarCity Corp cut its forecast for solar panel installations this year and reported a bigger-than-expected quarterly loss, sending its shares down 20.44% at 17.91 in extended trading Monday Vs a 52 wk trading range of 16.31 – 63.70 on high volume.


The company, backed by Tesla Motors’ (NASDAQ:TSLA) Elon Musk, said it expects to install 1.0-1.1 gigawatts in Y 2016, lower than the 1.25 GW it had forecast in February.

A pullback in a Key solar support policy in Nevada, a January price increase on residential systems and a redesign of its solar loan product were among the reasons SolarCity cited for the lowered forecast.

While the company’s installation figures were up 73% in Y 2015, it pours cash into new installations, a strategy that will not  initially generate operating profit. It reported negative cash from operating activities of $790-M last year.

The problem with SolarCity is that the company is losing money on every installation and trying to make it up on volume.

According to a company SEC filing, SolarCity expects to install 180 MW in Q-1 of Y 2016, compared to 272 MW installed during Q-4 of Y 2015.

The decrease in MW installed is due to SolarCity’s market exit from Nevada due to eliminating the net metering system in the state.

This led to the market exit of its peers Vivint Solar (NASDAQ:VSLR) and Sunrun (NASDAQ:RUN). Also, the company reduced its Q-1 2016 MW installed guidance due to a longer lead time in its ongoing commercial projects and seasonal change in demand.

The company says it intends to focus on generating positive cash from its operations by the end of FY 2016.

For Q-1 Y 2016, SolarCity posted operating expenses to be $229.7-M. This includes $30–32-M in non-cash amortization of intangible assets and stock expenses.

The company reported EPS of -2.56/share before accounting for loss or income attributable to non-controlling interests.

The company did not respond to an inquiry seeking comment.

SolarCity shares have declined by more than 40% since August. They fell to 21.84 on 4 May at the close in New York, the most since 10 February.

Symbol Last Trade Date Change Open High Low Volume
NASDAQ:SCTY 22.51 9 May-2016 0.67 22 22.64 21 9,781,600
HeffX-LTN Analysis for SCTY:  Overall Short Intermediate Long
Neutral (-0.14) Neutral (-0.15) Neutral (-0.22) Neutral (-0.06)

Stay tuned…

Paul Ebeling

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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.

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