Is SolarCity the Next SunEdison?

2015 was a volatile year for most of the solar companies. Excluding First Solar, almost all major players in the sector lost tons of money. When it comes to reporting losses, SolarCity (SCTY) is the standout performer.  The company experienced severe descending pressures throughout the prior few months, mainly due to the growth concerns. The competition is increasing at a rapid pace in the solar sector. On the other hand, speedy growth has usually been one of SolarCity’s supreme strength from an investment point of view, whereas its relatively hasty growth declaration is unquestionably concerning.

Furthermore, SolarCity’s latest quarterly results were so poor from a growth point of view, as the company lost almost one-fourth of its entire value just after the earnings release.
Also, the company still has not been excluded from current major residential solar headwinds. The escalating severe policy and financing situation in the residential solar segment are hurting SolarCity in many ways.

The recent rally of SolarCity will not last so long as much of the company’s success comes from its innovative and risk-taking nature. This mentality has also produced troubles for the company. More significantly, the company has had to discard its greatly unique MyPower solar loan product due to comparatively intricate and confusing nature.

In the beginning, SolarCity thought the product will be a success, but was not able to perform well and turned into a less popular product than depicted. Instead of using this highly intricate program, if SolarCity had started out with a pretentious and more general loan program, the company could have dodged this disaster.

What’s worse is that SolarCity’s extremely striving solar module manufacturing tactics are not moving ahead as efficiently as projected. Although the crucial outcome of its manufacturing goals is still far from positive, the company, at least, seems to have realized the troubles related with large-scale module manufacturing business. The comprehensive ramp-up of the company’s Buffalo manufacturing ability has been postponed by around 2 years, which could be mutilating given the quick pace of growth in photovoltaic.


SolarCity is facing many headwinds going forward. Given the company’s struggles, I don’t think SolarCity is a good investment. Profitability has been the primary concern in the solar sector which is why I think investors should consider adding First Solar to their portfolios. On the contrary, I think SolarCity is a sell for now and would recommend investors to stay away from the stock for the time being.
Published on Apr 14, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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