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Alternative Energy Investor Discussions
- Thread starter ShortSlaver
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CyberDutchie
Active Member
I also don't have a clue :redface: but my reasoning is as follows:
I'd like to own 200 more SCTY shares, but I don't have $5400 sitting around. So instead I bought the option to buy 200 at $20 come Oct 19, 2013. That call option cost me $1560 today.
I expect SCTY to continue to rise to well above $27 in October. If that's the case I will be able to get them on the cheap for $20. If they're under $20 by then, oh well, no point exercising my option and I will have lost my $1560. A gamble, I know.
Anywhere in between $20 and $27 my loss will be less. If between now and Oct 19 SCTY moves well above $27, I can also decide to sell my option at a nice profit--I don't have to exercise the option if I don't have the funds.
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Ahhh, your timing is impeccable then! And yes, I agree with the Supercharger announcement coming soon. I think he sort of hinted at it in about 2-weeks, and that was last week.
So maybe end of next week of sometime the following week?
Thank you. On May 3rd Musk tweeted: "Am getting lots of questions about the big Supercharger announcement. Aiming to do that the week after next."
This morning SolarCity revealed that its first quarter earnings report and conference will occur after the market close on May 13th: SolarCity Announces First Quarter 2013 Earnings Release Date and Conference Call (NASDAQ:SCTY)
Saw that this morning. They are reporting a bit earlier than I expected, however I have a handful of options that expire next week so it's nice they get a catalyst and possibly a second catalyst as well.
Now, if only WDAY could please begin tanking...
Citizen-T
Active Member
I like it. I've been much less exposed than I wanted to be long term, finally a chance to add to my position.
They took a hard fall like this last week after a similar downgrade to neutral, but then responded really well. I'm not sure if they will rebound as nicely this time. However, they have an earnings call next Monday which was moved up a few weeks from the estimated earnings call date. But I agree, if you like to buy on dips, this is a great opportunity if you believe it will go the right way for you.
SolarCity (SCTY -7.1%) seems to be moving downward this morning in concert with its competitor First Solar (FSLR -9.0%). After the market close yesterday FSLR reported quarterly earnings of 69 cents which was less than the consensus estimate of 75 cents. This morning S&P raised FSLR from a sell to a hold.
smorgasbord
Active Member
At the risk of getting flamed, I don't get the excitement around SCTY.
It's a solar installer. Unlike Tesla, it has no unique technology, no valuable patents, and no lead on the local competition. Solar City's Chinese solar panels are no better than anyone else's Chinese solar panels. This really is a finance company, adjusting loan/lease terms as necessary. That the competition is local makes for an interesting dynamic, which may not be positive, given that potential customers don't go by brand names, but by actual terms.
Can someone present an investment thesis for this company, with the stock at $24 today?
It's a solar installer. Unlike Tesla, it has no unique technology, no valuable patents, and no lead on the local competition. Solar City's Chinese solar panels are no better than anyone else's Chinese solar panels. This really is a finance company, adjusting loan/lease terms as necessary. That the competition is local makes for an interesting dynamic, which may not be positive, given that potential customers don't go by brand names, but by actual terms.
Can someone present an investment thesis for this company, with the stock at $24 today?
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No flaming here amongst this group! Your question/concern is perfectly warranted. The investment case is definitely off color and currently SCTY loses money and relies on solar related tax/purchase incentives. They are targeting this reliance on profit to ramp down to zero over next year or 2, as well as profitability. Without putting numbers to it, the goal is to become the default one stop go to for solar (akin to a Circuit City, Home Depot, etc). The business model is to use the latest solar panel technologies that will continually come online and improve.
Your right they are a finance company largely, in addition though they share in the energy income stream from utilities. So a second model for them long term is to be a distributed utility across all installations. It's a long term play that believes eventually huge numbers of small solar installations will form 'the grid' (or at least a major part of it). They are positioning to be the Google of that network. These are my observations, not those necessarily from Elon or any other quotable source. Use them at your own risk!
Yuri_G
Member
No thesis here, but a few reasons I see huge upside for Solarcity. Great incentive to customers, they pay nothing to get the panels installed and after installation their electric bill immediately decreases. Great growth potential because of this consumer business model as well as corporate partnerships. Lastly, decreasing panel prices actually help the company instead of hurt.
It's okay your skepticism is shared among many. We need to realize a few things: this is a low volume traded stock (relative to others).
-You are correct: they do not manufacture Solar Panels. This is a good thing, they essentially can get stuff cheaper as technology improves. Their profit margins will improve.
-They aren't a financing/leasing company. This is their "hook" for people to get them onto Solar Tech. Their goal is something like network distribution and Software as a Service. Elon's cousins made a similar company with computers and sold it to Dell later on which is the true value proposition here. It's a network (this will play into my next point).
-Overarching goal of Solarcity is to become a provider of a third type of Energy (you guessed it-- Solar). Something to the likes of National Grid, etc. The way their system is structured enables this. With Solarcity, any extra energy not used is fed back into the grid and the customer gains credit back. *This part is extremely important because it boosts SCTY's value and future prospects.
-Battery technology. This is important as well. Although SCTY doesn't have any patents, it goes hand in hand with Tesla because Tesla makes SolarCity's battery packs. This leads to economies of scale for Tesla and Solarcity and swapped revenue when SolarCity installs the panels on Superchargers.
I am long SCTY. The short term fluctuations will stink but I have a target in mind that is higher than $24.
Citizen-T
Active Member
I'm just trying to get exposure to what I believe will be a major theme the next decade: the shift to solar power. I think SolarCity is just the best of breed, so to get exposure to this trend, I want to own a piece of it. You are right, there aren't any major barriers to entry that I see.
That's where I'm at as well. Currently 200 I think with a target of about 400 at some point
I do see them as an innovative financing company. Basically most of what they do is get loans to buy your roof space off you, and then have a guaranteed revenue stream for the next 15 years or so. The closest analogy I can think of is cellphone subsidies, where Verizon, AT&T, T-Mobile etc give you a cheap cellphone in return for locking in your revenue for at least two years, and usually longer. I think it's brilliant, and the only reason they aren't yet making money is that they're continuing to expand, and that uses up their profits. If they stopped installing new systems, they'd turn profitable almost immediately, but of course they wouldn't grow any more either. (There's a company in Australia, Ingenero, that follows basically the same model, which is how I first heard of Solar City.)
I love that they exploit cheap solar panels, have a residual income plan that is augmented by selling back to the grid and leads to geometric growth as well as have the ability to execute better than their competition. It's a product that just makes sense and mathematically pays for itself with controlled risk. Not to mention everyone that uses their product has good things to say and their service is apparently very good.
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