SolarCity (SCTY)

[SBenson]

Maybe I'm reading this comment wrong. You don't see growth in the solar sector or benefit to being the clear leader in the industry?

I was specifically referring to big upcoming catalysts. What will arrest the price declines is the question. I don't know of any potential catalysts that could do it.

As you bring up, in a longer term perspective:

- Yes, solar will be huge. But nothing indicative that SolarCity business model will thrive (or even survive).
Contrast that with Tesla. EVs are the future. In addition, we can also say that there is no real competition to Tesla. See techmaven's posts to get an idea, especially the ones where he is dueling tftf.

SolarCity has plenty of competition from grid-solar to local-installers. Both of which are utterly cheaper options. SolarCity's service is not that differentiated. Solar is dumb. You throw the panels somewhere, they just work.

- All of SolarCity valuation is based on RV and RV-trajectory, both of which are thoroughly destroyed recently. So nothing to look forward to.

 

[TheTalkingMule]

Meh, that's the same old argument and share has only gone up. Half the people don't want to own their power plant or the hassles that comes with it. As costs go down for everyone and the product gets leaner, it'll only be a more compelling option.

Of course everyone is free to interpret value as they feel.

 

[SBenson]

Agreed, both arguments are same old. It boils down to what you believe.

 

[jhm]

Non-recourse is ABS debt right. No, there is no convertible.

Curious, why you asked. Are you suggesting something?

Oops, I meant to ask of the recourse debt is convertible. If it is, then is includes essentially call option on equity. The yield on convertible debt is very sensitive to the stock price.

 

[SBenson]

Oops, I meant to ask of the recourse debt is convertible. If it is, then is includes essentially call option on equity. The yield on convertible debt is very sensitive to the stock price.

Yes. That is is the very fact that makes matters even worse than they appear. If you remove the call option, the yields are even higher!

 

[TheTalkingMule]

Consumers will eventually make the value decision for the market. Sales and revenue at low cost will tell the story!

This drift back upward at the end of the day is disappointing, only got in one buy and then spooked myself enough to hold off on the other. I still think we will see a lower bottom later in the week, but you never know. This whole idea of Lyndon giving any kind of 2018 guidance on installs makes me worry there's a pop coming. Much better chance that confusion still reigns.

 

[jhm]

Yes. That is is the very fact that makes matters even worse than they appear. If you remove the call option, the yields are even higher!

I'm confused. How does removing the call option increase the yield? The final payout is the max of principle and stock value. Without the call option the final payout is just the principle. So whatever the price of the bond today it has a lower yeild if you assume the call option is unexercised. Am I getting this mixed up?

 

[SBenson]

I'm confused. How does removing the call option increase the yield? The final payout is the max of principle and stock value. Without the call option the final payout is just the principle. So whatever the price of the bond today it has a lower yeild if you assume the call option is unexercised. Am I getting this mixed up?

The bond maturing Nov 2019 has a price of $61 right now (for a face value of $100). It has a coupon of 1 5/8 and thus resulting in a yield of about 16%, based on current price.

The bond has some embedded stock options. If you were to remove the value of it, the price will be even lower and thus yield even higher. In very round numbers I think the price will be about $2 lower and the yield will be about 17%.

A better way to think about this is, what will be the yield that SolarCity will have to pay to raise capital through bonds today. If they were to do non-convertible debt, it will be higher than 16%, more likely around 17%.

Again this is for debt maturing in 3-years. For longer term debt SolarCity will have to pay even higher yields.

 

[Svetlin]

Anyone playing this ER? Just bought 5 $32 calls for next week for $1.6 each. Pure gambling. My only other SCTY positions are '18 leaps.

 

[dha]

Anyone playing this ER? Just bought 5 $32 calls for next week for $1.6 each. Pure gambling. My only other SCTY positions are '18 leaps.

Was thinking about buying calls. They are outrageously expensive. You're going to need a 27.5% movement upward to break even on those calls!

Decided to sell premium instead. Bought shares at $26.35 today and sold this weeks' $26.50 calls for $3 each.

Worst case: I acquire shares at a cost basis of $23.35. Otherwise I'll pocket a quick 11% return by selling these calls.

 

[TheTalkingMule]

Anyone playing this ER? Just bought 5 $32 calls for next week for $1.6 each. Pure gambling. My only other SCTY positions are '18 leaps.

Bought 18's @ 70 for super cheap

 

[SBenson]

In other news, I am expecting the other shoe to drop on SCTY tomorrow evening. So come Wednesday morning we should see some red in TSLA in sympathy.

I posted this yesterday afternoon in TSLA thread.

Turns out that I got this right. For a change...

 

[esk8mw]

And...a miss. SP getting hammered. Holy crap I hate 2016.

 

[SBenson]

There is a very good chance this goes under $20 this week. Eventually will be taken out private in $10 to $15 price range is my speculation.

 

[TheTalkingMule]

Record 272 MW Installed for a

Cumulative Total of 1.9 GW
253 MW Deployed with Forecasted Value of $3.64/W at a 6% Discount Rate
Record Low Cost of $2.71/Watt as $1.90/Watt
Installation Costs Achieve Initial 2017 Goal
Adjusted Asset Financing in 2015 of $2.73/Watt, above Q4 2015 Costs
2016 Guidance Remains 1.25 GW Installed wit
h Positive Cash Generation by Q4

Cash positive...hmmmm.

- - - Updated - - -

Looks like there's some extra cost calculations with this report, should be fun to see some new numbers.

- - - Updated - - -

The analysis from CNBC consisted of a guy saying "it's down 23%, why would I want that?" LOL.....numbers look decent enough considering the Nevada mess. Will load up on 2018 LEAPs down the line, but we are definitely in EXISTENTIAL LAND now!

Thank god I didn't load up at 2:30 today. I'm slowly learning!

 

[Noble Ninja]

There is a very good chance this goes under $20 this week. Eventually will be taken out private in $10 to $15 price range is my speculation.

We're down -32% in AH, down to about $18.

 

[dalalsid]

In the cash flow chart on page 10 of the presentation, what is the massive increase in O&M around 2025 and 2035? Inverter replacements?

 

[SBenson]

At this point, this is game over. They need to start looking for something strategic.

 

[TheTalkingMule]

Commercial installs were up 80-something percent, residential 50-something percent. What fundamental has changed after this earnings announcement?

 

[dalalsid]

At this point, this is game over. They need to start looking for something strategic.

Other than the lackluster Q1 guidance, I don't see how this was anything other than expected. What changed?