SolarCity (SCTY)

[gigglehertz]

Separately, just now checked IB rebate rates for shorting. They are north of 107% !!!!

OMFG what is going on here? The only explanation I can think of is that the firm is at a brink of a liquidity crisis and some folks know something inside...

Wasn't the rate briefly above 100% a few months back when we all got excited about a possible short squeeze? As I understand it it's only a matter of supply and demand. Desperate shorts trying to keep a lid on stock price willing to go that high. Fortunately for them I think falling oil prices may help them this time too.

 

[Jack6591]

My favorite Elon Musk quote:

Optimism, pessimism, f@%k that; we’re going to make it happen. As God is my bloody witness, I’m hell-bent on making it work.

Elon Musk has built an electric car that is outselling it's ICE competition from Mercedes Benz in Europe. He is delivery payloads to outer-f@#king space. He has developed built, and deployed reusable rockets.

Yet there are those convinced he is failing as Chairman of the Board of SolarCity. In the words of the Virgin Mary, come again?

 

[Jack6591]

HBO's VICE Interviews Elon Musk on "The Future of Energy"

SolarCity is an integral of Tesla's "Master Plan".

 

[dandurston]

Question:

SCTY has guided for 180MW in Q1 which is down ~30% from the ~250MW they installed in Q4. They've recently been talking about reducing sales costs to get the cost per watt down but it seems likely that they'll have pretty much all the same sales staff employed in Q1 as they did in Q4 (minus a few from Nevada presumably). So their total sales cost in Q1 seems likely to be not that different from Q4, while installed watts is down 30%, so it appears that sales costs per watt are likely to be much higher now. Is this a fair evaluation? A jump from $0.60/watt to $0.80/watt would look pretty bad even if it will reverse the following quarter.

 

[AndreN]

SCTY has guided for 180MW in Q1 which is down ~30% from the ~250MW they installed in Q4.

Q1 of every year for SCTY is a down quarter. Last year they dropped from 176MW to 153MW Q4'14-Q1'15 (link). Hard to install lots of solar panels during winter.

 

[TheTalkingMule]

Question:

SCTY has guided for 180MW in Q1 which is down ~30% from the ~250MW they installed in Q4. They've recently been talking about reducing sales costs to get the cost per watt down but it seems likely that they'll have pretty much all the same sales staff employed in Q1 as they did in Q4 (minus a few from Nevada presumably). So their total sales cost in Q1 seems likely to be not that different from Q4, while installed watts is down 30%, so it appears that sales costs per watt are likely to be much higher now. Is this a fair evaluation? A jump from $0.60/watt to $0.80/watt would look pretty bad even if it will reverse the following quarter.

Sales people work almost entirely on commission, so less sales equals less cost. And they were cutting some of the more expensive means of closing sales. Not exactly sure what they meant by that,perhaps paid leads.

Guess how much commission the salesperson gets for each panel that goes up......

 

[renim]

...

Guess how much commission the salesperson gets for each panel that goes up......

too much is my answer.

all in, nil subsidy, first world labour rates, solar should not be more than $1,200 per kW for a 6kW or larger system, with German inverters, make it $1,000 per kw with Chinese inverters.

if SCTY 'marketing' commission is $400 per kW, then thats an unnecessary 40% cost burden on the price of domestic solar.

Its also a cost burden that utility solar does not pay. another reason why 3.8c - 4.5c /kWh is not cherry picked, just representative of 2016 pricing. (although there are estimating involved for utility solar)


i think the major headwind for SCTY's financing is not sector wide issues, or market wide issues,
its the growing realization that charging 11cents/kWh plus a 3% escalation is not a bankable asset vs utility solar at 3.8c-4.5c/kWh. Yes the FICO scores of the homeowners may be great, but the asset itself is very overpriced. As the year goes on this becomes more and more obvious.

what is also obvious is that the shorts were too greedy, slow squeeze is occurring now.

 

[Jack6591]

This article adds quite a bit of color to the "Energy Mondernization Act".

Senate’s On-Again, Off-Again Energy Bill On-Again - Exchange Monitor

It is still difficult to expect anything from congress.

 

[TheTalkingMule]

i think the major headwind for SCTY's financing is not sector wide issues, or market wide issues,its the growing realization that charging 11cents/kWh plus a 3% escalation is not a bankable asset vs utility solar at 3.8c-4.5c/kWh. Yes the FICO scores of the homeowners may be great, but the asset itself is very overpriced. As the year goes on this becomes more and more obvious.

The problem isn't the price, it's the cost. Going solar with just a signature while undercutting the grid and will be considered one the the great products of our time, it's just not well positioned in the consumer's mind yet. People can't figure out if it's the Walmart, Amazon, McDonald's or Uber of energy.

Acquisition cost is keeping SCTY from offering a bit more flexibility around escalators, contract length, etc. So we have a bit a of chicken/egg issue here. If they had that $.67/W back to play with, all these little annoyances could be taken care. But I think we've now seen what happens when you try to find a way around real customer acquisition.....

SunEdison probe reveals 'overly optimistic' numbers

In answer to the sales commission cost....it's $32 per panel. And that's just for the outside sales rep. Once they figure out how to let people simply order SolarCity online it's game over, and to me that's an inevitable reality.

Half the market will be attracted to quality hardware installed inexpensively, the other half will be attracted to the zero-hassle model. Competition in zero-hassle is getting mighty thin, just need to get over the marketing hump.

 

[gene]

Finally scty is over $30.

 

[jhm]

SolarCity and SolarEdge are both up substantially. I point out SolarEdge because SolarCity is its leading customer. The market seems to be bullish on installations.

SolarCity put/call parity continues to be broken. This thing is way over shorted.

 

[doggusfluffy]

I am still mostly confused what the market or shorts are so afraid of regarding SCTY. Their costs are dropping and once Riverbend and GF1 are online they will be able to sell retail power competing directly with the grid pricing. Maybe I'm the sucker for missing some critical flaw.

Regulators Reject Third-Party-Ownership Petition in North Carolina

North Carolina is one of four states in the country -- along with Florida, Oklahoma and Kentucky -- where third-party entities are restricted from selling electricity directly to customers. A bill that would enable third-party financing in North Carolina was introduced in the general assembly last year but died in committee.

 

[gigglehertz]

Well this is a surprise. I sold all my shares late last week in anticipation of oil plunging and taking down SCTY, but oil being where it was on Friday and SCTY being UP $1.50 is surprising. Looking to get back in, but hesitant. I always seem to panic and buy/sell at the absolute worst time.

 

[TheTalkingMule]

With earnings right around the corner and a 10+% drop after the last few quarterly calls it may be safe to hold off a couple weeks to gauge the immediate response to the call. It sure smells like "the market" is just creating volatility for volatility's sake. Buying as the stock naturally drifts upward then sowing irrational doubt and shorting the quarterly tank. These people must just make money hand over fist.

To me it's a greater sin to buy at $30 before a tank to $24 than to miss buying at $30 and buy at $40. Remembering of course that this whole range is irrational. Anything below $50 is a bargain when you're targeting $160 within 12 to 36 months. That's my psychotic logic.

 

[doggusfluffy]

I have been thinking the major catalyst is as soon as this week if the Energy bill gets voted in, much like what extending the ITC did for SCTY.

ENERGY BILL FEELS LIKE SINGING: The bipartisan energy bill, once thought dead but now very much alive, is expected to see some Senate action this week. Under a procedural package agreed to last week, 29 amendments will likely be approved on a voice vote, followed by roll call votes on eight amendments upon which the Senate is more divided. After that, the full bill is expected to get a vote. ME hasn't heard anything on the timing of the votes, but our ear is to the ground

 

[TheTalkingMule]

Tomorrow is do-or-die for the Sanders campaign, needs to win NY by 6-10pts or so to have any real chance. Might have some interesting SCTY impact if he does very well.

 

[BobSk]

I buy at any technical entry points, then prepare to add more during a deep pullback. The long-term (10+ years) upside of this stock is greatly under estimated by the market. The downside risk is greatly over estimated. The method I used to value this company is trying my best to predict where this company will be in 10~20 years, instead of paying a lot of attention to what will happen in one or two quarters. One thing I know for sure, is this company will install huge amount of solar panels in the next 10 years. Elon said so.

 

[doggusfluffy]

I think in 10~20 years the concept you would ever need a public utility to provide something as simple, cheap and ubiquitous as electricity will be as mind blowing as a desktop computer in every home having been eclipsed by a smartphone in every hand across nearly the entire planet.
In Energy Politics, Simple Wins, But Simple is Usually Wrong

But even if we could switch to 100 percent renewable sources right now, we won’t.

Why? Because politicians seem disinclined to force rapid, deep de-carbonization on the American electric system. Until and unless that happens, we’re stuck with the reality that fossil fuels, nuclear power and renewables compete on price in electricity markets.

 

[jhm]

I think in 10~20 years the concept you would ever need a public utility to provide something as simple, cheap and ubiquitous as electricity will be as mind blowing as a desktop computer in every home having been eclipsed by a smartphone in every hand across nearly the entire planet.
In Energy Politics, Simple Wins, But Simple is Usually Wrong

Wow, that article is really badly framed. It presents a strawman argument and a false binary choice between coal and natural gas.

We need renewables to displace both. The debate right now is whether we need to go straight from coal to renewables or use natural gas as a bridge between the two. The author is probably enough of a sophist to know this and not to mention it. So this is pure propaganda for the "we need natural gas" camp. Gas producers are feeling threatened. In January FERC reported no new gas capacity added to the US grid. That's right, gas is getting edged out of the new power plant capacity market by renewable. Increasingly the US grid is going straight to renewables.

Moreover, this year the US will add about 9.5 GW wind and 16 GW solar. That's enough to generate 135 GWh / day and offset over 1 BCF/d of natural gas.

Where the antifracking people get it wrong is that we actually do not need to ban fracking to stop it. All that is needed is to continue to step up renewables at a pace that no new gas wells or coal mines are needed. We are just about at that scale this year. Already there is such a glut in both coal and natural gas that prices are below $2/mmbtu, which is unprofitable for both industries. So continuing to step up renewable will keep these price unprofitably low and will remove economic incentive for incremental fracking.

The author tells something which is fundamentally untrue about renewables. He presents the push to 100% renewables as something that requires government meddling to accomplish. The idea that renewables are dependent on politics to succeed and cannot compete on simple economics is wrong and misleading. It is actually gas, coal and nuclear that depend on politics for their continued existence. They depend on anticompetitive government sponsored monopolies. Opening up the utilities to genuine competition from distributed generation would drive coal and natural gas out of the market at an accelerated rate.

 

[gene]

First Grid-Scale Rail Energy Storage Project Gets Environmental Approval From BLM

ARES uses electricity from the grid to drive loaded locomotives up a grade. As the train cars descend, their motors then act as generators and provide electricity to the grid. According to VP of operations Francesca Cava, the round-trip efficiency of the system is 85 percent.