SolarCity Stock Up On Strong Earnings, Tesla Connection

SolarcityBy BrokenSphere (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

SolarCity Corp (NASDAQ:SCTY) narrowly beat Q4 expectations and provided strong guidance for 2014, giving the stock a small rally after what was a bumpy, but mostly positive, 2013. There is a delay in the full GAAP results, so not all of the details are in yet, but they are expected to be released on March 3rd prior to the company’s earnings call.

Fourth quarter installations were up to 103 MW, beating the projected 101 MW, with a mix of 70 MW worth of residential installations and 33 MW of commercial. Projected installations for 1Q14 are just 78 – 82 MW, but there is usually a dip in solar installations in the winter and this doesn’t affect the strength of 2014FY guidance: 475 – 525 MW in new installations with a 400 – 420 MW residential and 80 – 100 MW commercial mix, with about 40% of the year’s installations coming in 4Q14.

SolarCity will expand domestically, is looking for acquisitions

SolarCity Corp (NASDAQ:SCTY) expects to complete an asset-backed security (ABS) offering of $90 – $100 million by the second quarter, with more ABS offerings later in the year. The extra cash will help with the company’s efforts to expand its business in California, New York, Massachusetts, New Jersey, Arizona, and Maryland, as well as to make acquisitions though SolarCity management hasn’t named any particular companies that it’s interested in buying.

Deutsche Bank analyst Vishal Shah is bullish on SolarCity Corp (NASDAQ:SCTY) , reiterating his Buy rating and giving it a $90 price target. He notes that there is some risk of fallout from the SolarWorld trade case, but he sees the potential for a 30% reduction in costs, similar to what the company accomplished last year. He also notes that the time for installation is down, reducing book-to-install from more than 100 days to less than 70, which both reduces costs and potentially increases volume.

Tesla buzz may have spilled over into SolarCity stock price

Although he gets more press time as the head of Tesla Motors Inc (NASDAQ:TSLA), Elon Musk is also the co-founder and chairman of SolarCity Corp (NASDAQ:SCTY) , so when a recent Tesla shareholders letter mentioned that the battery manufacturing Gigafactory could have implications for the solar energy industry, many people’s minds went to SolarCity. Although they are separate businesses, it wouldn’t be surprising if Musk found a way to use the technological advances being made by one benefit the other. Excitement over the Gigafactory, which has pushed Tesla stocks to new heights, is probably also supporting the smaller rally that SolarCity has had over the last few days.

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About the Author

Michael Ide
Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.

1 Comment on "SolarCity Stock Up On Strong Earnings, Tesla Connection"

  1. Why are consumers still renting solar panels from leasing companies ? You can buy a higher performance name brand, grid tie solar system with U.S. made solar panels that offer higher performance than the Chinese/Taiwanese solar panels that the leasing/PPA companies offer from Solarhome .com for nearly 1/3 the cost of the same sized $0 down leased system.

    And if you need $0 down financing, it’s far better to get a $0 down FHA solar loan with tax deductible interest. $0 down Solar leases and PPAs will not only cost you up to 3 times more in the end, but also do not offer tax deductible interest, and you won’t even own the system after making 20 years worth of payments. And good luck ever selling your home with a solar lease attached to it. What potential home buyer will want to assume your lease payments on that used solar system, when they can buy a brand new solar system and keep all of the financial incentives for tens of thousands of dollars less than your remaining lease payments.

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