SolarCity (SCTY)

[ggr]

I think there were definitely elements of a short squeeze in play today. Volume was 4 times the average! Now, I could be wrong, but I think there are a lot of small traders (and even some big ones) who had their eyes off the ball today, with shopping and vacations and stuff. Also the margin calls will go out tonight; some shorts might get very unwelcome emails overnight. So, personally, I think there is more run-up for SCTY tomorrow (and hopefully TSLA too, although not as pronounced). Anyway, a very happy day for me!

Of course the other possibility is a reaction against the move(s). I'm happy to just watch it play out, since I was very long on both stocks.

 

[dakh]

Thanks for all the useful intel here folks. It would be difficult for me to just keep buying if not for all the insight I gained here. Back in the green again in my variety of SCTY holdings, not spectacularly so but pretty satisfying.

Interesting side note, ENOC is actually down today a bit. It has me puzzled a bit. Is that because demand response isn't going to have as much opportunity for arbitrage given increased renewables supply? But they are also supposedly working on integrating batteries into their algos so they should do at least Ok long term (if they do Ok at all).

 

[Johan]

I think there were definitely elements of a short squeeze in play today. Volume was 4 times the average! Now, I could be wrong, but I think there are a lot of small traders (and even some big ones) who had their eyes off the ball today, with shopping and vacations and stuff. Also the margin calls will go out tonight; some shorts might get very unwelcome emails overnight. So, personally, I think there is more run-up for SCTY tomorrow (and hopefully TSLA too, although not as pronounced). Anyway, a very happy day for me!

Of course the other possibility is a reaction against the move(s). I'm happy to just watch it play out, since I was very long on both stocks.

Ya think?

Up 34% in one day, I don't think those short (or long for that matter) wouldn't notice, unless it's a very insignificant position. Also there are likely quite a few investors who "go long and forget" (never look at the ticker). The number of shorts doing that can be counted on one hand.

That said if you did go short above today's closing price you'd still be "in the green" and psychologically it would be common to want to "wait for the correction" and then close your short, or double down. If your short is in the red and you didn't cover earlier today, in the $45-$50 range then cognitive dissonance may be setting in: "this thing is obviously overbought", "I'll wait it out" etc.

These shorts will get their margin calls and will need to face reality eventually, thus powering a squeeze to new all time highs.

Once there new longs will come in. These will be investors who "discover" or rediscover SCTY once the market puts value on the stock again, some due to technicals but most due to fundamentals (basically correctly interpreting the enormous value in the generous ITC extension, and the fundamental shift in policy we're starting to witness unfolding. More or less these are the people late in the distribution when it comes to how early you were able to catch on to the fact that fossil fuels are doomed and solar is the future. To people on this forum this idea seems so obvious and has been well founded for years, maybe even decades, but we have to internalize the reality that there is still a large chunk of investors to whom this is a novel and intriguing notion. Go figure.)

 

[blakegallagher]

still very red overall on my SCTY but today helped lol, I need 2 more days like today to hit the green I think

 

[dandurston]

Nice to see the big move today on top of the past few weeks. I first bought at $77 and kept buying all the way down to $28. Nice to be well into the green.

 

[doggusfluffy]

Nice to see the big move today on top of the past few weeks. I first bought at $77 and kept buying all the way down to $28. Nice to be well into the green.

Cheers dandurston. I can boast to a slightly worst initial buy at $80 and down from there. It has been a similarly wild ride to green indeed. :tongue:

 

[jhm]

Nice to see the big move today on top of the past few weeks. I first bought at $77 and kept buying all the way down to $28. Nice to be well into the green.

Super. Welcome to the forum.

I always feel better buying on the way down as opposed to the way up.

 

[blakegallagher]

Super. Welcome to the forum.

I always feel better buying on the way down as opposed to the way up.

I've learned I prefer buying options when the stock is flat or going up, buying on the way down (from 70) can be painful

 

[doggusfluffy]

I've learned I prefer buying options when the stock is flat or going up, buying on the way down (from 70) can be painful

Options only magnify my stupidity on the way down...but today they made me look like a genius that I can promise I am not.

 

[jhm]

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.

With Tesla, there was a sort of rolling short squeeze. One round of shorts would make a little money, get greed, then get burned. Just as that round of shorts would take their losses and close their position, another round of shorts would initiate at a higher price. Then the cycle would repeat. So the total number of shares short didn't need to change all that much.

So I wonder if that will happen for SolarCity. There very well could have been a lot of covering going on today. But there are probably a bunch of shorts thinking SolarCity really ought to go below $40 again so they pile on in the $50s.

So shorts will play whatever games they want. I'm not counting on a squeeze. What I try to stay focused on is what the company is doing and where sentiment is headed. And I am currently optimistic about both.

 

[Bgarret]

The other thing to consider is the additional news that will come out over the next week to 10 days. SCTY was very clear in their analyst day presentation that all estimates going forward were based on sun setting of the ITC. Once the ITC extension is signed into law (Friday or Monday) they will have another news cycle with fairly dramatic upward revisions. SCTY also emphasized that they were giving analysts the spreadsheets with the 6% DCF calculations (and the 10% ITC presumably) so they could do their calculations themselves. That will include analysts upward revisions of estimates, (already at $57+ Before the generous ITC extension).

There is also the potential for Tariff relief on the horizon - total speculation, but with Trina setting aside $45 million for settlement of the Solyndra case, things may be falling into place for some relief, which would help SCTY on a cost standpoint, as with higher production goals, they won't be able to in source all their panels in the near future.

Fun times ahead.

 

[TheTalkingMule]

With Tesla, there was a sort of rolling short squeeze. One round of shorts would make a little money, get greed, then get burned. Just as that round of shorts would take their losses and close their position, another round of shorts would initiate at a higher price. Then the cycle would repeat. So the total number of shares short didn't need to change all that much.

From reading around this afternoon/evening it seems like the short sentiment is as strong as ever. These guys will deny reality right up to $70/share, be forced to cover, then zoom! Just like TSLA.

It's amazing to me that people went through the TSLA squeeze and are now doing the EXACT SAME THING with ALL THE SAME PLAYERS on BOTH SIDES! An astonishing less in human nature.

 

[Foghat]

The other thing to consider is the additional news that will come out over the next week to 10 days. SCTY was very clear in their analyst day presentation that all estimates going forward were based on sun setting of the ITC. Once the ITC extension is signed into law (Friday or Monday) they will have another news cycle with fairly dramatic upward revisions. SCTY also emphasized that they were giving analysts the spreadsheets with the 6% DCF calculations (and the 10% ITC presumably) so they could do their calculations themselves. That will include analysts upward revisions of estimates, (already at $57+ Before the generous ITC extension).

There is also the potential for Tariff relief on the horizon - total speculation, but with Trina setting aside $45 million for settlement of the Solyndra case, things may be falling into place for some relief, which would help SCTY on a cost standpoint, as with higher production goals, they won't be able to in source all their panels in the near future.

Fun times ahead.

exactly.

The chain reaction of positive news hasn't even started yet.

Investment Tax Credit Extension Would Increase US Solar Installations 54% Through 2020 | Greentech Media

54% increase install base expected due to the passage of the ITC extension. And this is said to be conservative....

shorts are stubborn they will re enter for a while here so expect tranches of short squeezes like today for a while moving forward. Again, we really haven't even warmed up yet...

added bonus:

retroactive to 2015, Solarcity can depreciate 50% of new installed assets thru 2018... 40% in 2019...

Tax Credits Teed Up for Extension | Chadbourne & Parke LLP

added bonus2:

New tax credit helps fuel Solar City recovery


Senator Schumer had a little talk with Solarcity....Solarcity will be doing some new guidance releases soon after the signing of the bill into law.

Be prepared.

 

[Tedkidd]

Next we need everyone getting behind Carbon Fee and Dividend.

Carbon Fee and Dividend - Citizens Climate Lobby

[video]http://bit.ly/GreatHayhoeCCLvid[/video]

 

[dakh]

Thinking about possible short term developments here. Say one has a very large short position. A reasonable thing to do would be to wait for the initial wave that the news generated to die down and then try to manipulate the stock and exit. There's a chance some of those large positions are also constrained by having to show profit by year end. So they won't act before the extension is signed into law, but they won't wait very long after with their hit pieces. The wild card is if/when SCTY will issue revised guidance. Any ideas on the latter? Does this make any sense?

 

[SBenson]

Good Morning Everyone

Latest update, per IB, there are no shares available to short. Moreover the rebate rate went UP to 66%

Also checked S3 Blacklight data, the rebate rate went UP.

Tomorrow will get to see MarkIt data for yesterday (two days old always). Will let you know.

All indications so far say that short covering barely began. Or maybe new shorts are replacing the old shorts.

 

[jhm]

One little detail.

Before companies could only get benefits once a solar project was completed. But in the current bill, they can take advantage in the year that installation starts.

I wonder if this could go into effect for installations begun in 2015. It's very nice to get some of those credits a year earlier. It helps with cashflow.

The is possibly most relevant to large installations. Stats on large installations have always seen completions peak on Q4 as installers push to get tax credits under the wire. But under this new rule. The push will simply be to start a project by year end. So completions should be more evenly spread out through the year. This probably would save on labor costs, as workers get consistent hours throughout the year.

- - - Updated - - -

Good Morning Everyone

Latest update, per IB, there are no shares available to short. Moreover the rebate rate went UP to 66%

Also checked S3 Blacklight data, the rebate rate went UP.

Tomorrow will get to see MarkIt data for yesterday (two days old always). Will let you know.

All indications so far say that short covering barely began. Or maybe new shorts are replacing the old shorts.

Benson, thanks for the update.

It looks like we've got them right where we want them. The price lift has come from buyers, and it is very costly for shorts to apply selling pressure. They have been running out of rope with which to hang themselves.

So buyers can take this opportunity to accumulate before shorts exit en masse. Shorts are paying dearly not to push the price up, but they are running out of firepower.

 

[hirox]

Solarcity was up to 64 in pre-market. Fat-finger order?

 

[TheTalkingMule]

Looking set to open around $57 as of now, but then again yesterday was much more pronounced when the Bell rang.

 

[SBenson]

One little detail.



I wonder if this could go into effect for installations begun in 2015. It's very nice to get some of those credits a year earlier. It helps with cashflow.

The is possibly most relevant to large installations. Stats on large installations have always seen completions peak on Q4 as installers push to get tax credits under the wire. But under this new rule. The push will simply be to start a project by year end. So completions should be more evenly spread out through the year. This probably would save on labor costs, as workers get consistent hours throughout the year.

I don't know the exact mechanics of it. Whether they get to retroactively take credit in 2015 or if it will be in 2016 but based on 2015 credit rate. It may not be very material except for some very detailed tax management.

However, I read something even more positive a while back. Can't locate it now. Apparently project commencement can be interpreted all the way back to beginning of making of the panels. What does that even mean? Does digging up earth to find raw materials count as beginning? Does installing equipment in a factory count? In any case, these analysts were predicting that the interpretation can be applied in such a way that the ITC can be taken further out for a few extra years. So if all this is correct, the ITC doesn't go down to 10% in 2022. It happens in 2024/5. And the step downs to 26% and 22% are further out than published too.

Moreover who is to say ITC won't be extended or increased (from 26, 22 level) again.

Climate change is a market failure. The heavy government hand wants to give us boat loads of money. It pays to be on the right side of the history.

- - - Updated - - -

I get the feeling that much of the market didn't quite get to see the detail of this tax credit extension. I didn't see details spelled out in any news articles. As all the detail gets out I have a feeling that the stock continues to run up. We are way ahead of the curve here. or so it seems.