$27 is a reasonable target, with support from early May and the 200 day moving average...but you can only identify a bottom after the fact.
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$27 is a reasonable target, with support from early May and the 200 day moving average...but you can only identify a bottom after the fact.
CyberDutchie
Active Member
In that case I should dump my SCTY Oct '13 $20 calls that I got for $7.40. I'm nervous of SCTY going lower and lower. What is on the horizon between now and Oct 19 that may reverse the direction, anyone dare to speculate?
Like I have been saying for the past two months, SCTY is a black box when it comes to valuation and there is no way of telling how much this company is worth today. That is why I choose not to invest in it even though it is one of the best solar companies around. There are just so many other solar companies with cheap valuations that are pretty straightforward to value, hence I invest in those instead.
Am I the only one here scooping up solar companies at a discount? Some of these valuations are ridiculous; the only way you can justify the valuation is if we enter another recession. But if the economy continues improving so will these stocks.
SPWR at $21? Sign me up please!!! There is no where to go but up for this stock.
SPWR at $21? Sign me up please!!! There is no where to go but up for this stock.
InTheShadows
Active Member
To be honest I have been focusing on tesla these last few days. I have been considering picking up a few more solar leaps.
mershaw2001
I'm short the short sellers
Hey sleepyhead. Tell me you're going for solarcity too, because that's the one I've been scooping up. I look at the chart and vomit, but everything else says buy. On the chart it just broke through the 100 day moving average and seems to have broken to the downside. If I were to just go by the chart, I'd expect a long bar down tomorrow and a resulting price of 28 dollars. However, I don't think that's going to be the case for SCTY.
As far as I can tell, the headwinds for the company going forward are going to be the increased borrowing rate as long term money in safer assets can compete with a long term investment in solarcity. Since they require such large cash amounts, I think that the main loss in price from 38 to 32 was not the result of other solars doing poorly and SCTY matching it, I think it was the result of higher interest rates. I also think that we might see costs go up on solar panels as some chinese solar panel companies go out of business permanently.
Those are my downsides. However, I see tremendous upsides because they have been signing up people like crazy, but more importantly they have been signing up large businesses and government operations. They have legitimatized their operation by attracting walmart and the government, and that adds stability to the company in much the same way as when tesla did a secondary at 92 and paid back the gov loan. I don't see the headwinds above warranting a drop in price equivalent to 10 dollars per share. I see fair value still around 37, about a 10% discount to its price at earnings based on the higher interest rate issue. Furthermore, while we're on interest rates, I see these interest rates as high and most likely going to come down to 2.5% for the 10 year as the fear over the end of QE abates a little, which means that SCTY improves its edge.
I've increased my SCTY position by 40% by buying at 35, 34.5 and 31.95. I probably won't be buying any more unless we see a break down to 28 in which case I'll grab a little more at 28.90, but mainly because I'm maxed out on margin at this point. The part that worries me the most is that I can't get a solid sense of what SCTY valuation is and neither can anyone else and so 28 seems like a possibility out of fear. The reason I don't think this will happen is that I was looking at short analytics today and I think that the nearly-doubling of short selling today makes it harder to force the price down. They are already carrying a 10-20% annual fee to be short, and if it didn't break on the assault today, I think we might hold the line at 32, with a pop to 36 or 37 on good news. I just wish that the management here was as competent as elon at managing short sellers.
Feel free to comment. I didn't get any bites early on my interest rate hypothesis.
As far as I can tell, the headwinds for the company going forward are going to be the increased borrowing rate as long term money in safer assets can compete with a long term investment in solarcity. Since they require such large cash amounts, I think that the main loss in price from 38 to 32 was not the result of other solars doing poorly and SCTY matching it, I think it was the result of higher interest rates. I also think that we might see costs go up on solar panels as some chinese solar panel companies go out of business permanently.
Those are my downsides. However, I see tremendous upsides because they have been signing up people like crazy, but more importantly they have been signing up large businesses and government operations. They have legitimatized their operation by attracting walmart and the government, and that adds stability to the company in much the same way as when tesla did a secondary at 92 and paid back the gov loan. I don't see the headwinds above warranting a drop in price equivalent to 10 dollars per share. I see fair value still around 37, about a 10% discount to its price at earnings based on the higher interest rate issue. Furthermore, while we're on interest rates, I see these interest rates as high and most likely going to come down to 2.5% for the 10 year as the fear over the end of QE abates a little, which means that SCTY improves its edge.
I've increased my SCTY position by 40% by buying at 35, 34.5 and 31.95. I probably won't be buying any more unless we see a break down to 28 in which case I'll grab a little more at 28.90, but mainly because I'm maxed out on margin at this point. The part that worries me the most is that I can't get a solid sense of what SCTY valuation is and neither can anyone else and so 28 seems like a possibility out of fear. The reason I don't think this will happen is that I was looking at short analytics today and I think that the nearly-doubling of short selling today makes it harder to force the price down. They are already carrying a 10-20% annual fee to be short, and if it didn't break on the assault today, I think we might hold the line at 32, with a pop to 36 or 37 on good news. I just wish that the management here was as competent as elon at managing short sellers.
Feel free to comment. I didn't get any bites early on my interest rate hypothesis.
mershaw - Everything you wrote is correct, except that I would worry more about long term interest rates and not what happens in the next few months.
You wrote, "I can't get a solid sense of what SCTY valuation is and neither can anyone else..." and that is why I am not a fan of investing in SCTY. The only reason to invest in this company is if you plan on holding the shares for a long time.
You also wrote, "I also think that we might see costs go up on solar panels as some chinese solar panel companies go out of business permanently." If you think that this will happen then you should be investing in those Chinese solar producers that will survive.
I like your strategy of investing in laggards though and I am sure that these trades will work out for you in the long run; just be patient. I will stick to SPWR and my favorite Chinese players.
You wrote, "I can't get a solid sense of what SCTY valuation is and neither can anyone else..." and that is why I am not a fan of investing in SCTY. The only reason to invest in this company is if you plan on holding the shares for a long time.
You also wrote, "I also think that we might see costs go up on solar panels as some chinese solar panel companies go out of business permanently." If you think that this will happen then you should be investing in those Chinese solar producers that will survive.
I like your strategy of investing in laggards though and I am sure that these trades will work out for you in the long run; just be patient. I will stick to SPWR and my favorite Chinese players.
As mentioned in a few posts before I dipped into Solarcity using some of my Tesla proceeds. This is definitely a long term play and I think the downpressure is due to overall market sentiment and the fact that Tesla is getting so much attention right now without people really realizing how these two companies go hand in hand. Word on the street is that SCTY and TSLA trade in lock step which is for the most part true with the exception of recent times. Tesla has been getting a SERIOUS amount of press and I think the attention is overweight on TSLA.
I think once people wise up and realize that SCTY installs solar panels for Tesla (superchargers, factory, and customers) and the fact that SCTY is using Tesla chargers. We'll see SCTY make the bull run it had. The plans are there and the attention to Solar will come back.
I think once people wise up and realize that SCTY installs solar panels for Tesla (superchargers, factory, and customers) and the fact that SCTY is using Tesla chargers. We'll see SCTY make the bull run it had. The plans are there and the attention to Solar will come back.
Norse
Active Member
Jonathan Hewitt
Active Member
I'm still down quite a bit on SPWR
Which is why it's the time to buy! haha. I'm in the same boat.
Opinions on this? http://www.bloomberg.com/news/2013-...-million-selling-shares-notes.html?cmpid=yhoo
Elon and Lyndon buying should be a positive, still dilutive though, what do you guys think?
Elon and Lyndon buying should be a positive, still dilutive though, what do you guys think?
It's great news. It is essentially a TSLA move, but what will matter is the reasoning for the secondary offering. My guess is for more rapid expansion and deployment of Capex funds. In addition to this, it creates a price floor and it alleviates some of the long term pressure if you get another round of buying for long term investors.
Dilution isn't too high given the number of shares outstanding. I feel like this is more of a symbolic and delivery on execution play.
Here's the S-1/A they filed this morning. I like to read these in full.
SolarCity - Registration Statement
Norse
Active Member
mershaw2001
I'm short the short sellers
Why would they offer at a higher price to share price? I think that is totally an elon move, essentially saying the shares are so massively undervalued that he doesn't mind tacking on a little extra. I see this as such a positive move!
Norse
Active Member
People might be afraid if earnings are bad?
Anyone else but me got Sol sep calls? I think they will do good. Especially since it seem to plan a secondary offering after earnings and not before.
btw would love to hear your thoughts on scty when your done Dave.
I picked up some Sep SOL calls as well. I didn't want to post this during market hours, but in my opinion I think that SOL might have blowout earnings. This is just my somewhat educated guess, I could be very wrong so I didn't want anyone buying a ton of options or shares and losing money because of me.
I feel like they are going to have blowout earnings, because analysts have them losing the same/slightly more money in Q3 vs. Q2. I don't think this is reasonable at all and these analysts are going to have to revise their estimates.
I haven't done enough research, but SOL did say that their production costs are going to go down another couple of cents in the second half. $0.02 is 4% and that is an additional 4% of gross margin on top of the 5%-6% that they preannounced for Q2 (vs. negative gross margin in Q1). Therefore we are looking at 10% gross margin in Q3, and it might be higher because panel prices have gone up in Europe due to negotiated deal. Remember they opened their poly plant on 7/1/13 which is the first day of Q3. Q3 guidance IMO has to be really, really good. I would expect them to break even in Q3 or at least be closer to break even than the analyst consensus of a -$0.32 loss.
The risk is that I am wrong (duh) and that the market was/is expecting similar results and guidance as I am and the stock will sell off when management doesn't deliver such guidance. They have a lot of exposure to EU and maybe because of the 7GW limit they will not be able to sell as many panels in Europe as they would have liked.
@bhuwan - If you buy a stock then you should be ready to buy the stock at a lower price. If you liked SPWR at $25 then you should be jumping all over it at $21 - that is my investment philosophy. If you were just looking to play SPWR before Q2 for a potential short squeeze then you should have gotten out of the stock on the day after the earnings announcement when it was obvious that there will not be a short squeeze.
@Norse - I also bought some other calls such as SPWR J15 and TSL J15. I bought some SOL A14 and Sep13 for speculation. also some CSIQ M14 calls too, I then bought some YGE today A14 and some Sep $4 calls at $0.45 when the stock was at $4.22. This looked really cheap to me and the price seemed too good to be true so I jumped on it. All I need is for the stock to go up 5% to break even. With earnings tomorrow YGE will either go up 10% or more and my calls will double or the stock goes down and I lose 50%. I think the risk is to the upside on YGE though.
The problem with solar is that there is a lot of risk and none of them have any LEAPS (expcept for SPWR and TSL), so even though I am sure that CSIQ will do really well in a good economy, I am not sure that the stock will be able to climb fast enough to make any money on the 6 month calls. If they had J15's available I would be all over those.
Time will tell, but the most likely scenario is that these solars start taking off like crazy and then we will be regretting that we didn't take more risk. Then they will crash again 30% - 40% and we will be staying away from them again only to watch them go up 100% again. Rinse and repeat. This has been the story with solar stocks and sometimes this cycle takes a month or two, and sometimes 6 months. It is hard to tell when to buy these options. I think we are still a little early, but I am ready to buy more in a month or two if prices continue to go down.
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