SolarCity Shares Crash
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.