The Sun Shines on SolarCity (SCTY) Again
Shares of SolarCity (SCTY), which installs solar energy systems to residential and commercial customers, surged more than 20% last week, although the company posted a disappointing net loss for its first quarter. During the first quarter, SolarCity reported a net loss of $0.41 per share, or $31 million, which came in below the Thomson Reuters consensus estimate for a loss of $0.32 per share. This was a sharp decline from the profit of $0.04 per share, or $656,000, it had reported in the prior year quarter.
However, SolarCity's revenue surged 21% to $29.99 million, topping the consensus estimate of $29.1 million. Operating lease revenue also nearly doubled to $15.1 million, as it deployed 46 megawatts during the quarter, a year-on-year increase of 12%. Daily Chart
Much of SolarCity's surprising top line growth can be attributed to its lack of global exposure. Many solar companies, such as First Solar (FSLR
) and SunPower (STP
) have been too heavily exposed to European and Asian markets, which have cut back on government subsidies in times of macroeconomic turmoil. SolarCity, on the other hand, has a limited domestic presence in 14 states. The company has also secured funding for U.S. residential solar leases, which was initiated last year, and its funding was increased again in April. SolarCity has also made similar deals with U.S. Bancorp (USB
), Google (GOOG
), and Honda Motor Company (HMC
). In the United States, homeowners, businesses and non-profit organizations are able to claim federal tax credit worth 30% of the cost of installed solar-powered systems. These subsidies increase the affordability and feasibility of solar power as a viable widespread alternative energy source. Goldman Sachs (GS
) also recently announced that it would finance more than $500 million of SolarCity's solar projects as part of this initiative. Goldman Sachs analyst Stuart Bernstein recently stated that the firm had a target of $40 billion in renewable energy investments over the next decade. Jimmy Chuang, SolarCity's vice president of structured finance, stated, "The Goldman lease financing will make affordable solar electricity available to more types of homeowners and organizations. We expect to be able to expand our offering to a broader customer base by lowering the credit requirements even further in future financings." Over the past few years, large investment banks, such as Goldman Sachs and JP Morgan (JPM
), have purchased large lots of desert land in the United States, in anticipation for the surging long-term demand for solar power. Looking forward into the second quarter, SolarCity expects its operating lease revenue to rise to a range between $16 million to $18 million, and forecasts a deployment of 48 to 45 megawatts. Shares of SolarCity currently trade with a negative PEG ratio due to its lack of profitability, but shares have surged 280% over the past twelve months, making it a growth focused, momentum-driven green stock on par with Tesla Motors (TSLA
). SolarCity does not pay a dividend. Other News About SCTY Goldman Finances Huge SolarCity Push to Build Panels
Goldman Sachs' investment propels the speculative stock to all-time highs. Why SolarCity's Stock Jumped Today
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Published on May 20, 2013
By Leo Sun