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Why SolarCity Shares Soared

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 SolarCity (NASDAQ: SCTY  ) rose more than 23% during intra-day trading Friday after the company both released key third-quarter operating metrics and significantly raised its 2014 financial guidance.

So what: In Q3, SolarCity deployed 78 megawatts of solar power products. As a result, the company still expects to achieve its previously issued fiscal 2013 guidance of deploying 278 megawatts. That brings its total number of solar contracts to 72,506, from which the company ultimately expects to receive more than $1.7 billion in contract payments over the course of their lifetimes.

But what really got investors excited today was SolarCity's fiscal 2014 guidance, which now calls for deployments of between 475 megawatts and 525 megawatts, or a year-over-year increase of 70% to 89%.

Now what: It's worth noting today's news comes hot on the heels of SolarCity's $158 million acquisition of solar-racking maker Zep Solar, which was only just announced on Wednesday and should help the company lower the cost of components required to install its products.

All things considered, when we combine that with SolarCity's impressive forward guidance, its five-year goal of reaching at least one million customers with approximately 6,000 megawatts deployed is looking more achievable by the day.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 12, 2013, at 11:08 AM, joeCompo wrote:

    This is my problem with some of the MF commentators. Not sure if they get past the surface of things. Rare that a stock goes up because guidance is change. The question is why was the guidance changed. In this case it is real simply, on that day the State of California changed the rule that said utilities can stop buying from solar generators once they reach 5%. New rule, no limit, so the there is no longer a cap on how fast a solar generator can grow. Just take getting past the surface of things.

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9/27/2016 4:00 PM
SCTY $19.99 Up +0.01 +0.05%
SolarCity CAPS Rating: ***