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SolarCity Shares Crash

May 11, 2016

By Paul Homewood 




From Silicon Beat:


Shares of SolarCity nose-dived on Tuesday after disclosing earnings results that cast gloom over the provider of solar systems.

San Mateo-based SolarCity shares lost about one-fifth of their value due to the grim report for its first quarter that ended in March. Tuesday marked the first full day of trading after the financial results were released.

The big problems for the solar company: The quarterly report disclosed a loss that was bigger than expected, and management followed that up with a dismal outlook for future results.

“Bookings came in a lot lower than expected,” Lyndon Rive, chief executive officer and co-founder of SolarCity, told analysts during a conference call to discuss the financial results. “We had a bunch of headwinds that hit us all at the same time.”

The obstacles included regulatory challenges that stymied bookings and increased prices that stifled sales.

SolarCity lost $2.56 per share for the first quarter, which was far worse than forecasts from Wall Street for a loss of $2.32 a share. The per-share results and expectations both were adjusted to exclude one-time items that won’t recur and aren’t based on operations.

The renewable energy company did beat expectations about revenues. SolarCity generated $122.6 million in revenue, ahead of the prediction of $110 million.

SolarCity tumbled 20.8 percent, or $4.69 a share, and closed at $17.82.

Matters weren’t helped when the green energy company offered guidance for a second-quarter loss that would range from $2.70 to $2.80 a share. Wall Street was expecting a loss of roughly $2.13.

Analysts also were dismayed because the solar firm trimmed its estimate for installations of solar systems during 2016 to a range between 1,000 megawatts and 1,100 megawatts.

Previously, the company had guessed installations would be around 1,250 megawatts this year.

So far in 2016, SolarCity shares have plummeted 65 percent.

Company executives believe the regulatory obstacles and challenges in procuring customers should begin to recede for the company, leaving more upside in future quarters.

“There is growing demand by customers who want to own their solar equipment, so we think our solar loan product will have an impact, we’re entering into the summer and then we’re also going to be expanding into new states, “Those are areas that will help us with additional bookings,” Rive said.


It is not only SolarCity which is suffering, as Reuters report:


After their hot rally at the end of last year, shares of solar energy firms have turned ice cold as concerns about slower growth and regulatory uncertainties plague the group.

SolarCity (SCTY.O) led the sell-off on Tuesday after the company cut its 2016 forecast for solar panel installations late on Monday and posted a larger-than-expected quarterly loss. The stock, down 25 percent at $16.94, was on track for its worst decline in three months and is down 66.8 percent for the year.

Shares of Sunrun (RUN.O) lost 12.1 percent to $6.49 and are down 45 percent for the year. Vivint Solar (VSLR.N), which also announced a first-quarter loss after the bell on Monday, shed 4 percent to $2.38 on Tuesday and is down 75 percent since Dec. 31.

Investors have been worried about the outlook for growth for the solar sector, especially following a pullback in an important Nevada solar support policy and uncertainty about pending regulatory decisions in other states.

Nevada regulators this year announced changes that mean new tariffs that will raise fees solar customers pay to use electric grids. Reimbursements to users are also being cut and investors fear such moves could be repeated in other states.

"For the longer term, solar is still viable, but right now on Wall Street, no one has any confidence in the regulatory environment for the state level," said Robert Lutts, president and chief investment officer at Cabot Money Management in Salem, Massachusetts.

"Are we encouraging future solar growth, not only on the residential side but on the utility side? That’s a question that nobody knows the answer to until we see more regulatory changes," said Lutts, who sold his solar shares last year.

SunEdison, once the fastest-growing U.S. renewable energy company, filed for bankruptcy protection last month after some debt-fueled acquisitions proved unsustainable.

Solar shares were among Wall Street’s darlings in previous years, with some companies posting triple-digit annual gains.

Just last December, solar shares rallied after federal lawmakers reached a deal to extend investment tax credits beyond 2016.

The Guggenheim Solar Invest exchange-traded fund (TAN.P) was down just 1.6 percent in early afternoon trading on Tuesday but appeared to be resuming its bear trend, down 56 percent from its early 2015 peak. SolarCity is its largest holding.

At least six brokerages cut their price targets on SolarCity following the company’s results.

  1. May 11, 2016 3:32 pm

    Should the headline read ‘SolarCity Shares Crash’? Or am I just not seeing the joke?

  2. martinbrumby permalink
    May 11, 2016 3:42 pm

    Meanwhile, back in the UK, we learn:-

    “Investors in renewable energy are being put off the UK by political posturing hostile to renewables and green efforts, and the slashing of government support for clean power supplies, in favour of potentially more expensive alternatives such as shale gas and nuclear power. –Fiona Harvey, The Guardian, 10 May 2016”

    Yes, you did read that correctly. Shale gas “more expensive”. Or, as the BBC would infallibly put it:- “More Expensive & Controversial Shale Gas”

  3. May 11, 2016 3:53 pm

    i’ve been bearish on green stocks since 2008

    (not the comment by famous economist Professor Cris Lingle)

  4. May 11, 2016 3:54 pm

    “the real question for this typical Elon Musk construct is not whether the company is the next SunEdison, but whether Tesla will be the next SolarCity.”
    SolarCity Corp (SCTY): The Beginning Of The End?

    Clearly SolarCity hasn’t been getting enough free advertising from the BBC, unlike his Tesla biz.

    • May 11, 2016 4:22 pm

      Tesla is the greatest short I have seen in a decade. Question is only when to go short. I reckon near yearend, when it is clear they have missed deliveries for 2016 by a mile. Promised ~90000, will maybe hit 30000 for 1H16, their two top factory execs have just quit, and what they are building has major quality issues. Doubling production in 2H16 is very unlikely, and trying will worsen the quality problems.

      • Graeme No.3 permalink
        May 11, 2016 4:32 pm

        I see you’re an optimist expecting them to last into next year. Or are you counting on Obama propping them up until then?

      • It doesn't add up... permalink
        May 11, 2016 7:48 pm

        Isn’t it a surrogate bet on the presidency?

  5. John F. Hultquist permalink
    May 11, 2016 4:36 pm

    Last August Fitbit shares traded at $51.64. This week they are at ~$14.
    October of 2014, GoPro shares traded at $93.79. This week they trade at just under $10.
    It is interesting to examine the commonality of Fitbit, GoPro, and SolarCity. Each sells to people with funds to spend on “desires” rather than “needs.”
    Maslow’s hierarchy of needs

    A person does not need a bio-tracker on her wrist. A person does not need a movie camera on his head. A home does not need solar panels on its roof.
    While the buyers are not the same, they are still niche markets. The main difference is that SolarCity has the harvesting of subsidies as a tail wind.

    Tip for investors in such companies. Get in early and out early.

  6. Mickey permalink
    May 11, 2016 6:19 pm

    It seems that in most cases when these companies complain about “regulatory obstacles” they really mean lack of government subsidies and biased industry rules.

  7. Bitter&twisted permalink
    May 11, 2016 7:06 pm

    It’s a real bummer when reality bites.

  8. Nigel S permalink
    May 11, 2016 8:24 pm

    What is BBC Radio 4 ‘Future Proofing’ boosting at moment? Solar energy of course and so soon after advertising Tesla cars too. This evening’s programme included the claim (at 21:18) that the grid “… sheds 93% of the power by the time it actually reaches the end user.” (I was sure it was 97%). ‘Costing The Earth’ (R) at 21:00 is about Huang Ming ‘undisputed leader of China’s booming solar industry’ and his Sun City(!) in Dezhou.

    • May 13, 2016 3:01 pm

      The first 20 mins is about FUSION
      then the mad presenter does a minute on SOLAR
      The context of the 93% is that he is talking not about the average but the furthest customer from the power station
      then next part is batteries
      Ah I see these awful presenters each take a line ..woman fusion, man : solar
      The prog is awful as usual.

      The guy keeps going on about how good solar and smart grids are but its unsubstantiated stuff..f the top off his head

  9. May 11, 2016 11:34 pm

    Reblogged this on Climatism and commented:
    Shock news.

  10. Andrew Duffin permalink
    May 12, 2016 7:35 am

    It isn’t a business, of course; it’s an organisation set up to farm rents from a government subsidy scheme which has now been reined back significantly. So it’s raison d’etre is gone, and the organisation’s time is therefore over. It will now be wound up. There’s nothing more to say really.

    All this stuff about earnings, profits, investment, and so on is just so much window-dressing: this organisation never had any of that in real life and never will.

  11. May 15, 2016 4:44 pm

    ‘Elon Musk’s SolarCity Sucked Into Federal Corruption Probe’

    ‘Federal prosecutors want SolarCity’s records regarding Cuomo’s so-called Buffalo Billion plan, which has New York taxpayers paying $750 million to finance a one million-square-foot “gigafactory” for SolarCity near the city of Buffalo.’

    And that’s only the half of it.

    Read more:

    Read more:

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