6 Risk Factors That Could Destroy SolarCity

Solar energy is one of the hottest sectors in the market, and for good reason. The long-term market potential of solar power numbers in the trillions of dollars, and SolarCity has an ambitious goal to become America's solar utility. However, there are risks that threaten to destroy SolarCity's business model and cost investors dearly.

Jul 24, 2014 at 10:38AM

Solar power is one of the most promising industries of the next few decades -- potentially transitioning the world toward sustainable, clean, and renewable energy. Environmentally friendly and cheap electricity promises to create jobs, fuel economic prosperity, and make long-term investors rich. 

US Solar Energy Production Chart
U.S. Solar Energy Production data by YCharts.

U.S. solar power production has grown at 20% annually over the past decade, and the potential worldwide is even better. For example, IHS estimates that global solar installations through 2020 will total 537 GW, an estimate that is up 13% since last year and represents $1 trillion in investment in just the next six years. 

Companies like SolarCity (NASDAQ:SCTY) and SunEdison (NYSE:SUNE) offer distributed solar systems that could make them into the solar utilities of tomorrow. They promise to let investors cash in on what may be one of the largest long-term energy bonanzas in history and have become Wall Street darlings.

SCTY Chart
SCTY data by YCharts.

Although the potential for SolarCity is indeed massive, investors should be aware of six major risk factors that threatens not only SolarCity's short-term share price but its entire long-term business model. SunEdison is also affected by several of these; however, thanks to the IPO of its yieldco Terraform Power Inc (NASDAQ:TERP), I believe SunEdison makes a more promising long-term investment -- at least at the moment. Check out the slideshow below to see why. 

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Adam Galas has no position in any stocks mentioned. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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