Should you Buy into SolarCity’s Rally?

Shares of stocks have rallied recently following the planned extension of Income Tax Credit (ITC). SolarCity has jumped over 80% in the last few weeks and while I was bearish on the company in the recent past, I think the ITC extension will help the company in the long run. There are many factors that can contribute to SolarCity’s long-term growth. Let’s take a look at some of those reasons.

Light at the end of Tunnel

For SolarCity, 2015 was not a good year, as the company dropped its growth targets, displayed escalating sales prices, and lingers to post huge losses quarter after quarter.
In spite of all the negative headlines, the company took various steps to sustain in the weak end market that could prove to have long-lasting effect.

When the company purchased Silevo in 2014, the company took a huge risk by entering into solar panel producing, as manufacturing solar panels has been very risky business that has lost a great portion of shareholders money, and there was no assurance that the company could manufacture high efficiency panels.

However, the company proved managed to deliver in 2015 when it manufactured a solar panel which was 22 percent efficient, one of the most efficient panels in the industry. At present, this panel is 15%-17% more efficient than many other solar panels marketed from China.

It still remains a mystery that the company can bump into its own price target of around $0.55 per watt, still the efficiency delivered by the solar panels acts a sign of relief for stockholders. Another major risk in SolarCity’s model has been its extensive focus on the U.S. residential solar market. In August, the company sunk its teeth further into residential solar when it acquired ILIOSS in Mexico.

SolarCity’s acquisition of ILIOSS offers it great exposure outside of the U.S. and a big opportunity to inflate its commercial business as well. In 2014, SolarCity presented the ZS Peak system for commercial rooftops, and escalating the commercial business has been SolarCity’s strong point.

The company’s residential rooftop business can act as a growth driver, but can adversely affect the company if it remains the only focus. Therefore, ILIOSS acquisition plays an important role for company’s future growth.


SolarCity’s focus on residential as well as commercial rooftop sectors will help it gain market share from its rivals. It will also help SolarCity to make the most of the recent extension of the ITC and the stock looks set for more upside.
Published on Jan 12, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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