Is Elon Musk's SolarCity in Trouble?

SolarCity (NASDAQ: SCTY ) recently reported very disappointing results for the fourth quarter of 2012. Installations are growing but the company's operating costs are out of control. With more and more competition in the leasing business, is the company in trouble?

Motley Fool contributor Travis Hoium gives his take on SolarCity and looks at how investors should interpret the weak numbers.

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Fool contributor Travis Hoium manages an account that owns shares of SunPower. Travis Hoium personally owns shares of SunPower and has the following options: Long Jan 2015 $7 Calls on SunPower, Long Jan 2015 $5 Calls on SunPower, and Long Jan 2015 $15 Calls on SunPower. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Report this Comment On March 12, 2013, at 4:29 PM, Rytg21 wrote:

Investors need to hang tough. SCTY is expecting losses for a couple years but is gaining a large client base and is scooping up a great percentage of the market. Huge profits will be seen by the company and its investors in a relatively short period of time. Don't be intimidated by quarterly reports.
Report this Comment On March 12, 2013, at 8:46 PM, ronwiserinvestor wrote:

It's not the competition from the other leasing companies that SolarCity should be concerned with. It's the competition from the solar owership companies that would keep me awake at night if I offered solar leases or PPAs. Pricing for solar systems have dropped to historic lows over the past three months. So low in fact that leasing a solar system or signing a PPA no longer makes financial sense when compared to the return on investment that a homeowner would see if he or she purchased their system. And if the consumer needs a $0 down option, then there's always FHA's $0 down solar loan that allows the homeowner to keep the 30% federal tax credit worth thousands of dollars as well as any other applicable financial incentive for a much better ROI. I'm my opinion, at today's much lower pricing, the leasing/PPA model will soon be doomed to the history books.
Report this Comment On March 14, 2013, at 10:32 AM, Rytg21 wrote:

The initial investment will still always be a hurdle for the average consumer. Federal incentives only are available for a short period
Report this Comment On March 14, 2013, at 10:34 AM, Rytg21 wrote:

Of time. The solarcity model will be around much longer then any federal loan program.
Report this Comment On April 30, 2013, at 6:48 AM, GreenWaveEM wrote:

Based on both the video and the well-informed discussion in the comments (I mean that), my conclusion is that Solar City is a risky investment. Possible returns could be high, but there are several quite large factors not under the control of Solar City (e.g. types of government subsidies, movement of buyers to direct purchase, large competitors especially solar manufacturers, etc) that may control the investment results more than the quality of the company management or the solar industry overall.

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Is Elon Musk's SolarCity in Trouble?

Comments from our Foolish Readers

Report this Comment On March 12, 2013, at 4:29 PM, Rytg21 wrote:

Report this Comment On March 12, 2013, at 8:46 PM, ronwiserinvestor wrote:

Report this Comment On March 14, 2013, at 10:32 AM, Rytg21 wrote:

Report this Comment On March 14, 2013, at 10:34 AM, Rytg21 wrote:

Report this Comment On April 30, 2013, at 6:48 AM, GreenWaveEM wrote:

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