SolarCity (SCTY)

[SBenson]

SBenson, NextEra is essentially Florida's utility, looking to buy Hawai's utility and then also a very large nationwide generator of wind and to a lesser extent solar. They are one of the largest renewable generators in the nation. Also, they operate ~5 nuclear plants.

Thanks. In terms of price action I think it generally tracks the broad market indexes. I am thinking of selling out between 105 to 110. To be honest I expected a bigger reaction in the stock based on wind PTC. Although, I should say, I didn't dig into the financials. So I don't know exactly how much of a benefit PTC will accrue.

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To clarify my protective puts at earnings statement, if SB is right and retained earnings get revised down, that would obviously be very bad in the short term. My simplistic assessment of the stock value is based entirely on that plus growth rate. I'm not saying it will happen, but it could. I haven't had a chance to view the investor presentation yet (can't stream at work, was busy last night, kicking myself) so not sure what their current guidance is. But like he himself is saying, at this point it almost doesn't matter.

Ironically, the most sophisticated wall street analysts from premier banks like JP Morgan and Deutsche Bank do exactly that!

The business is fundamentally the same however they report their numbers. But if they were to adjust RV to installs (rather than bookings), people who don't know better will go through a sticker shock.

This is not investment advice, but personally I will lighten up my position a bit before ER (will not completely sell out though). I hope the shorts get enough squeezed by then.

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Trying to gauge how much fuel is left in this rocket. At present we have 7mil shares traded, while short interest has risen from the last time the stock was at 50 by about the same amount. My intuition tells me that this suggests the panic covering has mostly been done, and we wont see a continuation of this vertical lift-off. Is there any sense in that?

I suppose many of the shares traded this morning may have been new longs entering on the ITC news, so perhaps there are still quite a few underwater shorts out there that have held on, so there may be a little more fuel left, but I think the next big move will be when there is a catalyst (probably a few analyst notes, which I expect to be very positive) or a catalytic move by some larger shorts.

As per IB, there are no shares available to short and the current rebate rate is 66.4%.

Short covering barely began.

From this morning in case you missed:

Here is something to chew on

TSLA Short Interest

3/15/2013 - 32.3 Mln shares - stock price $35.29
5/31/2013 - 18.6 Mln shares - stock price $97.76

SCTY Short Interest

11/30/2015 - 32.1 Mln shares - stock price $28.76
1/15/2016 - ?? ??

I hope I am not too crazy expecting a $90+ print in early Jan

Use your own judgement though. I have been wrong in predicting price action enough number of times.

 

[doggusfluffy]

Trying to gauge how much fuel is left in this rocket. At present we have 7mil shares traded, while short interest has risen from the last time the stock was at 50 by about the same amount. My intuition tells me that this suggests the panic covering has mostly been done, and we wont see a continuation of this vertical lift-off. Is there any sense in that?

I suppose many of the shares traded this morning may have been new longs entering on the ITC news, so perhaps there are still quite a few underwater shorts out there that have held on, so there may be a little more fuel left, but I think the next big move will be when there is a catalyst (probably a few analyst notes, which I expect to be very positive) or a catalytic move by some larger shorts.

Well, volume just hit 10 mil for today. I'm guessing maybe 25% of short interest could have covered so far? I'm purely guessing.

 

[TheTalkingMule]

Trying to gauge how much fuel is left in this rocket. At present we have 7mil shares traded, while short interest has risen from the last time the stock was at 50 by about the same amount. My intuition tells me that this suggests the panic covering has mostly been done, and we wont see a continuation of this vertical lift-off. Is there any sense in that?

I suppose many of the shares traded this morning may have been new longs entering on the ITC news, so perhaps there are still quite a few underwater shorts out there that have held on, so there may be a little more fuel left, but I think the next big move will be when there is a catalyst (probably a few analyst notes, which I expect to be very positive) or a catalytic move by some larger shorts.

Think of where we are and what each type of investor might be looking to do.

Are longs going to sell any time soon? Unlikely. Most longs got in at $35-$55 and see the upside as being far past $50. So they're not selling. How much new long volume could be expected today considering recent news? Double normal? Triple? Far more? They're going to be almost all of the action today.

Shorts are screwed and not going to unscrewed themselves any time soon so long as they have a glimmer of possibility that there's another dip to be had. That being said, I really don't have much clue what I'm talking about. Just my personal assumptions based on what happened to TSLA.

My guess is we see a series of short-squeeze-based run ups over the next little while, then an earnings/guidance catalyst will be required to make the real jump into the stratosphere on a mega-short-squeeze. There's going to be a tug-of-war between the perception of a "failed unprofitable model" and a "hyper growth money printing machine" over the next year. The numbers will tell the story and the real liftoff will happen from there.

 

[JRP3]

Let's all show Benson some respect.

If directed at me I don't think pointing out a 180 degree change from uber bear to long is disrespectful in the least.

 

[Foghat]

Everyone needs to step back and think about this for a second....

solarcity will have 3 more years of ITC at 30%. Then 2 more years of 26% and 22%. Expect a massive guidance change as soon as the bill becomes law. Solarcity will easily bump guidance to 1.5-1.6gws for 2016. They now might also give a 2018 guidance outlook now as well. There is clear visibility now so expect them to share that with investors. Banks are salivating for big time tax equity, so expect big abs offerings for a very long time to come. Can't emphasize the positive chain reaction this is going to have on many aspects... Especially going into powerwall and power pack integration ramp...

the short squeeze hasn't even started yet. Wait till we see 30mln shares traded every day this week and next, then talk about the squeeze slowing down.

 

[The Blue Owl]

If directed at me I don't think pointing out a 180 degree change from uber bear to long is disrespectful in the least.

To me it's not about respect/disrespect, it's about missing the point he was trying to make. If the conditions on the ground change (which they did with the ITC decision), shouldn't the conclusion change? As an investor, I am more interested in why someone reaches a certain conclusion rather than the conclusion itself.

What matters is consistency in reasoning. His reasoning didn't change; the premises did, however, triggering a strategy change which he announced on the record. Sticking to previous assessments when faced with changing data is not a virtue. Adjusting to a new reality is.

 

[TheTalkingMule]

Everyone needs to step back and think about this for a second....

solarcity will have 3 more years of ITC at 30%. Then 2 more years of 26% and 22%. Expect a massive guidance change as soon as the bill becomes law. Solarcity will easily bump guidance to 1.5-1.6gws for 2016. They now might also give a 2018 guidance outlook now as well. There is clear visibility now so expect them to share hat with investors. Can't emphasize the positive chain reaction this is going to have on many aspects... Especially going into powerwall and power pack integration ramp..

the short squeeze hasn't even started yet. Wait till we see 30mln shares traded, then talk about the squeeze slowing down.

The big lesson from the post-3Q Earnings tank has been the insight into how the market will perceive results and guidance from SCTY. I believe it was SBenson who hit his sweet spot in investment logic when he mentioned most folks were being irrationally exuberant the day prior to 3Q Earnings. That turned out to be right on the money. Chart readers and algorithms took the news as mediocre and short pressure tanked the stock even though the news on install cost lowering and post-ITC guidance really should have been positives.

Where does that take us from here? Is that inverse logic still the best method of trading this stock? Should we be looking for slight negatives on the next couple earnings days, or has this lesson been learned by all parties involved and integrated into algorithms and charts? I have to think that the barrage of wildly positive new guidance will destroy any chance of downswing due to "chart people" over-reacting. There's just too many good angles, and as you mention they all reinforce and feed back on each other.

SCTY can now safely paint an accurate picture of what 2017/18 will look like and when people compare those figures to current market cap...........bickering over retained value interpretations will be inconsequential. Can't wait to get this thing voted on and signed.

 

[Foghat]

The big lesson from the post-3Q Earnings tank has been the insight into how the market will perceive results and guidance from SCTY. I believe it was SBenson who hit his sweet spot in investment logic when he mentioned most folks were being irrationally exuberant the day prior to 3Q Earnings. That turned out to be right on the money. Chart readers and algorithms took the news as mediocre and short pressure tanked the stock even though the news on install cost lowering and post-ITC guidance really should have been positives.

Where does that take us from here? Is that inverse logic still the best method of trading this stock? Should we be looking for slight negatives on the next couple earnings days, or has this lesson been learned by all parties involved and integrated into algorithms and charts? I have to think that the barrage of wildly positive new guidance will destroy any chance of downswing due to "chart people" over-reacting. There's just too many good angles, and as you mention they all reinforce and feed back on each other.

SCTY can now safely paint an accurate picture of what 2017/18 will look like and when people compare those figures to current market cap...........bickering over retained value interpretations will be inconsequential. Can't wait to get this thing voted on and signed.

Lets be real, the only reason scty was down was because of ITC expiration, California net metering decision, and chanos short. The fundamentals are extremely strong, not even close to what some have stated here in the past. That is not even a debate.

The debate was on policy problems. Those policy problems are now dissolving as an accelerated pace. It's quite astonishing actually. We might really get to a renewable grid much faster then even the most optimistic projections now.

Utiltiy rates are rising in all Solarcity markets, yet Solarcity is continuing to reduce its retail rates at the same time. Now with ITC fully extended for 5 years, that will only accelerate with scale.

 

[FluxCap]

JASO briefly exceed the $9.69 buy-out offer price, reaching a high of $9.75! I took the opportunity to cash out of my stock, but it'll be interesting to see what happens to the offer now.

I'm debating doing same and buying SCTY/SPWR/SEDG with proceeds, but that's quite a run-up today.

 

[doggusfluffy]

I'm debating doing same and buying SCTY/SPWR/SEDG with proceeds, but that's quite a run-up today.

Well if this is only the beginning of the squeeze, will we hit $60 by the end of the week?

 

[Gerasimental]

As per IB, there are no shares available to short and the current rebate rate is 66.4%.

Short covering barely began.

From this morning in case you missed:

Use your own judgement though. I have been wrong in predicting price action enough number of times.

I agree that most short covering hasn't happened, but I think that this chunk of shorts (that shorted below 50, based on thinking the company was unviable, rather than the stock overvalued) mostly has. I'm almost positive another big chunk will cover soon, but that it will take another catalyst to kick off the next leg of the squeeze,by causing panic among the next chunk of shorts - the ones that shorted between 50 and 60 which looks like a chunk about the same size as appears to have covered today.

 

[Noble Ninja]

In the past two months, SCTY went down ~50% from beginning of October to mid-November, then went up ~60% from mid-November to mid-December and ~25% just today alone. What a wild ride it's been. When it was $25 not too long ago, I really wanted to buy more but didn't have spare funds available since I was all-in for SCTY at $50 (lesson learned to always have spare funds ready to buy).

 

[TheTalkingMule]

Watching the $70 call options for Jan 2017 crawl down to $1 a few weeks back with no cash to invest was unbearable. Ah well, it's only money.

 

[Foghat]

Watching the $70 call options for Jan 2017 crawl down to $1 a few weeks back with no cash to invest was unbearable. Ah well, it's only money.

Especially watch what happens at 11AM pacific time today....

also, be on the look out for the Solarcity abs PR to be released soon. Maybe after bell today or tomorrow.

 

[jhm]

If directed at me I don't think pointing out a 180 degree change from uber bear to long is disrespectful in the least.

It was not directed at any one person. Many of us, myself included, have given Benson a hard time since turning bearish. So I just wanted to give some credit to what he has contributed.

 

[doggusfluffy]

I guess maybe end the week @$60 was a lowball estimate? Any guesses? :biggrin:

 

[TheTalkingMule]

$55.20 And the shorts aren't nearly out yet. Delicious.

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I guess maybe end the week @$60 was a lowball estimate? Any guesses? :biggrin:

I just want to see $120 by this time next year.

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Total volume as of now is 14.2M, can I assume only maybe 20% of that is shorts covering? Or is it much higher?

 

[SBenson]

Hope everyone is enjoying the ride.

Per IB the rebate rate is still at 61.98% and still no shares available to short.

So I repeat the short covering barely began.

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A quick note on Fed.

SolarCity is not exposed much to the short term rates. It is much more exposed to the long term rates as it leverages much of the cash flows. Today's Fed announcement, after the initial noise, didn't move the 10-year treasury bond much at all. Meaning FOMC decision and it's forward looking guidance have no material impact to SolarCity's business. Btw, even the short term rates are expected to move up very slowly. The next move is apparently priced for June.

 

[Foghat]

If any of you were around when tesla went through the squeeze, scty is shaping up in similar fashion.

itc extension is the biggest catalyst in the past decade for the entire industry, Solarcity is positioned to benefit the most.

 

[doggusfluffy]

If any of you were around when tesla went through the squeeze, scty is shaping up in similar fashion.

itc extension is the biggest catalyst in the past decade for the entire industry, Solarcity is positioned to benefit the most.

I was not. I guess we know all the shares Elon just bought probably won't be for sale too right? I have no idea what to expect here.