Why SolarCity's Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of solar installer SolarCity (NASDAQ: SCTY  ) fell 14% today after reporting earnings.

So what: During the fourth quarter, revenue grew 22%, to $25.2 million, but fell well short of the $38.3 million analysts expected. The company also reported a loss of $1.10 per share, which far exceeded the $0.43 loss that Wall Street expected.  

Now what: The big question for SolarCity is; When will it make a profit? This quarter didn't ease any fears investors had and, with shares trading at double the IPO price, expectations have gone up in recent months. I'd take a "wait and see" approach with SolarCity, because there's no indication it can control operating costs and grow sales enough to generate a profit for shareholders.

Interested in more info on SolarCity? Add it to your watchlist by clicking here.


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  • Report this Comment On March 07, 2013, at 9:29 PM, ronwiserinvestor wrote:

    Maybe that's because consumers across America are beginning to realize that it's far less costly to buy a solar system and keep the 30% federal tax credit and cash rebate than it is to give all of your incentives away to some leasing company while paying more for your solar system.

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