Why SolarCity Corp.'s Shares Shot Higher Today

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 Corp. (NASDAQ: SCTY  ) jumped 19% today after the company reported another outstanding quarter.

So what: First-quarter installations were 82 MW, at the high end of its guidance, and revenue more than doubled to $63.5 million. SolarCity's model defers revenue for as much as 20 years so actual loss attributable to shareholders was $24.1 million, or $0.26 per share.  

The biggest news was that 2013 guidance was increased 25 MW to 500-550 MW and 2015 installed guidance was set at 900 MW to 1 GW.  

Now what: SolarCity continues to grow at breakneck speed in residential solar and it's impressive to book 136 MW of installations in the quarter, of 80% of which were residential systems. The one flaw I see is a 139% increase in operating expenses to $81.8 million. SolarCity needs to keep operating expenses in check and keep retained value per watt, which fell about $0.05 to $1.83, high to generate value long term. But in a high-growth mode, it's expected to see operating expenses rise.

Long term, the guidance is extremely encouraging and even though I have questions about SolarCity from a valuation perspective, I can't deny that they're knocking it out of the park operationally.

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Read/Post Comments (4) | Recommend This Article (3)

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  • Report this Comment On May 08, 2014, at 4:03 PM, Solarexpert wrote:

    This is good news! The more money solar leasing companies bring in, the more marketing they do. The more marketing they do, the more awareness about solar they develop. The more awareness about solar they develop the more consumers turn to the Internet to do their research. The more consumers turn to the Internet to do their research, the more they find our websites and the more sales we take away from them with our higher performance solar systems at our much, much lower pricing and our $0 down solar loans with tax deductible interest. Thank you !!!!!

  • Report this Comment On May 08, 2014, at 6:29 PM, Garn333 wrote:

    I think you meant 2014...

    "The biggest news was that 2013 guidance was increased 25 MW to 500-550 MW "

  • Report this Comment On May 08, 2014, at 8:11 PM, haaggus wrote:

    Companies like Solar City are great but their stock prices are based on fantasy. Netflix is a great company but the stock price is a joke. Be careful when thinking about buying Solar City, you will probably miss out on a major buying opportunity when it dips.

  • Report this Comment On May 09, 2014, at 10:22 AM, hroen wrote:

    I couldn't agree more about the need to reign in operating expenses. Revenues are not the problem with SCTY, but until operating expenses are reduced, no matter how many customers the company has, they will have a hard time turning a profit

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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8/28/2015 4:00 PM
SCTY $48.00 Up +1.77 +3.83%
SolarCity CAPS Rating: ****