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 residential solar installer Vivint Solar Inc (NYSE:VSLR) dropped as much as 13% today after reporting first quarter earnings.
So what: Quarterly installations jumped 131% to 46 MW and bookings grew 90% to 50 MW, which drove revenue to nearly triple to $9.5 million, ahead of estimates of $8.1 million from Wall Street.
But on the bottom line, Vivint Solar lost $60.0 million, or $0.57 per share, more than the $0.38 loss analysts expected and that disappointed investors today.
Now what: Vivint Solar is complicated to analyze because most of its installations are in the Northeastern U.S., not in the Southwestern U.S. like SolarCity's (NASDAQ:SCTY.DL). So, snow in the first quarter of the year has a big impact on installations, revenue, and costs.
That led to a sharp rise in cost per watt from $2.96 in the fourth quarter of 2014 to $3.21 per watt in Q1, which isn't surprising but it also led to the larger than expected loss.
I have my questions about whether Vivint Solar's lease or power purchase agreement strategy will endure much longer, but from a value perspective I think it's better than SolarCity. Vivint Solar is growing more quickly and it is installing about a third as many systems as SolarCity each quarter but it's trading for a quarter of the price. If you're interested in the residential solar space the upside is high with Vivint Solar and some of the market's worries in the first quarter should prove short lived.