SolarCity stock has declined more than 24% in the last six months, mainly due to concerns over falling oil prices. Investors are worried about the solar industry as oil and other energy prices continue to decline. The price of oil has tumbled 55% since June 2014 to below $50 a barrel, the lowest since the 2009 recession. SolarCity is highly shorted, so any good news could trigger a massive short squeeze.
40% of SolarCity float is sold short
According to Nasdaq, as many as 20.57 million SolarCity shares were held short as of Dec.31, up 10.4% from 18.64 million shares on Dec.15. That may not be a meaningful increase for a single update. But short interest in SolarCity has added up over time. During 2014, short interest skyrocketed by 219%. Nasdaq data show that the short interest is up a staggering 711% since March 2013.
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
It means about 40% of SolarCity float is sold short. Of course, as Bill Maurer points out, some of the shorts could be convertible debt holders, but there is more going on. The days to cover ratio has shot up from 1.49 on June 30 to 8.74 days on Dec.31. Now it will take about two full weeks for shorts to close out their positions. Maurer says investors have grown bearing on the stock due to falling oil prices.
SolarCity EVP unloads shares
SolarCity continues to aggressively expand its business. The company recently appointed former Obama strategist Jon Carson as senior director for its Ambassador program to bring in more customers. However, Congressmen questioned the company’s “potentially deceptive sales tactics” after multiple customer complaints. Many SolarCity customers have complained that company’s solar program doesn’t generate savings as promised by the company.
Separately, SolarCity EVP Seth Weissman disclosed in an SEC filing that he sold 26,463 shares of the stock on January 9. He offloaded those shares on the open market at an average price of $49.86 for a total of $1,319,445. Following the transaction, he now owns 132,314 shares of SolarCity.