SolarCity (SCTY)

[dha]

Short Situation Update: ZERO shares available for me to borrow at ETrade or OptionsHouse. Updates from users of other brokers very much appreciated!

Am I correct that now with the ITC package fully exposed, the next single biggest factor affecting SCTY is the simple market dynamics of the short squeeze? New guidance with ITC will be the next catalyst which will come from analysts over the next days to week or two? Is this an elementary, yet still proper way to think about what is happening to the stock?

My feeling is that the extreme short situation will continue to dominate the price action for some time. Even if other catalysts appear I don't believe it will be so straightforward to differentiate the impact. Aside from new guidance and analyst upgrades, which you mention, I feel we may get an extra bump once the spending bill is actually signed into law (which I believe should happen tomorrow or Monday?)

In other news: Jim Chanos will be appearing on CNBC after the closing bell today. Should be very interesting to hear what he has to say and how nervous he seems now that this position (and his TSLA short) are turning against him in a big way. If he gives any indication that he is considering covering his short (or that he already has, to any extent) I would expect extreme panic covering right away.

 

[jhm]

Short Situation Update: ZERO shares available for me to borrow at ETrade or OptionsHouse. Updates from users of other brokers very much appreciated!



My feeling is that the extreme short situation will continue to dominate the price action for some time. Even if other catalysts appear I don't believe it will be so straightforward to differentiate the impact. Aside from new guidance and analyst upgrades, which you mention, I feel we may get an extra bump once the spending bill is actually signed into law (which I believe should happen tomorrow or Monday?)

In other news: Jim Chanos will be appearing on CNBC after the closing bell today. Should be very interesting to hear what he has to say and how nervous he seems now that this position (and his TSLA short) are turning against him in a big way.

The shorts have no firepower. So the best they can do is go on TV and lie. FUD is all they got.

 

[TheTalkingMule]

Chanos is gonna be brilliant today, I'm sure he's in the dressing room as we speak rehearsing his convoluted nonsense. Will tip my glass to him at happy hour!

 

[SBenson]

Short covering seems to have started. Per IB the rebate rate dropped to 41.52%. But there are no shares to short.

I am not sure if the rate means anything. It's like saying saying price of a banana is $1 but there are no bananas to be sold. I guess it simply means if bananas were available or become available any minute now, they will be sold for $1.

For context, rebate rate on TSLA currently is 0.94% and rebate rate of our nemesis CLR is 0.38%. Both of these names have high short interests around 28% of float. So in general any rebate rate over mere 2% is excessive shorting.

I wouldn't consider short covering to be done until the rebate rate atleast falls under 10%. So we will see how long this will take (and how much higher the stock price will get).

 

[doggusfluffy]

Do you not think Chanos has also changed his position, now that the facts have changed? I'm not sure but the US market for solar is no longer sub-primed. :wink:

 

[Ocelot]

I do not often get the chance to post (mid-day especially). It has been a great two days. Unfortunately I bought lots of my options at extraordinary prices..and even with the last week, am down 30-40 per cent on some. But on the other hand some that I had written off, have life.

More importantly than the $$$, is that this was the right thing to do. The world needs change, and funding clean energy is a necessity, not an option.

I really appreciate all the opinions and information in this thread, both long and short side. I am not nearly as knowledgeable as those who post here, but whatever knowledge I have with respect to solarcity comes a large part from this thread. So thanks everyone.

I have essentially no funds left to deploy as bought some more shares yesterday, and a few call options today with summertime expiry.

 

[TheTalkingMule]

Chanos coming on after the commercial break. CNBC

 

[jhm]

Amazing to me, SolarCity up 6%, after going up 34% yesterday and on a day when the market is down 1.5% and oil has fallen another 2%, $34.8/bbl. Also the solar industry as a whole is down almost 1%. So something special is going on with SolarCity.

 

[Foghat]

Chanos has no clue. Solarcity sells retail electricity. Not whole sale electricity. Nat gas can go to zero. So can utility solar. Both can go to zero and still utiltiy retail rates will be higher then distributed rooftop solar. No matter how you cut it, centralized monolpoly utiltiy business model is flawed going forward. Solarcity will be cheaper then the cost of transmission, so there is no debate whether roof top is better or not. Or, if rooftop can compete will falling panel prices. Yes. A resounding yes, it will utterly dismantle the utiltiy as we know it.

Secondly, every solar install will come with energy storage coming very soon now the ITC will be extended 5 years at actually much better terms then the past 9 years under ITC. As such all retail rates will be determined by the aggregation rate Solarcity gets for being the aggregator of the network of solar+storage. In addition, local microgrid markets for peer to peer buying and selling will be also established of which the center piece is Solarcity software. I don't know if many of you caught it, but Peter rive said emphatically he's been developing the software for 10 years now that will become the standard operating software. This is like Google. This is like Apple iOS. This is like Microsoft Windows. This like blu Ray over win DVD. Massive massive implications to becoming the standard for the Internet of energy, the NYSE of retail energy.

dont forget m, both the rive brothers founded a company that created software that controlled computers REMOTELY before starting Solarcity. You see the connection here?

Chanos has no clue what so ever and will really remember the slaughter his position will receive. I love it.

 

[TheTalkingMule]

Chanos doesn't care to have a clue, he's in the business of picking at perceived weakness and making money. Kind of a boring interview, I had hoped he's be a little more aggressive. Apparently his thesis is that any solar entity with an outside sale force is bad. That's it?

As for utility solar.....all anyone has to do is look at the value of utility companies in Germany to see what will become of ours. Even utility scale solar isn't saving them. Micro-grid solar farms will be widespread, but that's privately owned.

The biggest piece of value that SCTY is bringing in is the ability to build relationships with all these somewhat early adopters so they can sell them the next big thing. Once everything moves toward decentralizing, SCTY will be the IBM or Microsoft as mentioned above.

 

[SBenson]

FWIW, there seems to be an awful lot of noise going on in the congress in approving the bill(s). Not because of Solar specifically anyway. We all blissfully ignored all of it and are riding on the hope that the deal is a done deal. Maybe some shorts are still betting on the deal to fall apart.

In any case, the latest is that, overall the situation seems to be under control (despite considerable bickering on both sides of the aisle). If it gets signed into law, as planned, we might see another leg up as shorts give up their last ditch hope.

 

[Johan]

I wish Chanos would just double down on his short on a day like today, and announce it publically. Pretty please, with sugar on top, double down the short.

 

[mejojo]

FWIW, there seems to be an awful lot of noise going on in the congress in approving the bill(s). Not because of Solar specifically anyway. We all blissfully ignored all of it and are riding on the hope that the deal is a done deal. Maybe some shorts are still betting on the deal to fall apart.

In any case, the latest is that, overall the situation seems to be under control (despite considerable bickering on both sides of the aisle). If it gets signed into law, as planned, we might see another leg up as shorts give up their last ditch hope.

The people voting care more about going home for holiday than any misguided principles.

Done deal IMO.

 

[Foghat]

Chanos doesn't care to have a clue, he's in the business of picking at perceived weakness and making money. Kind of a boring interview, I had hoped he's be a little more aggressive. Apparently his thesis is that any solar entity with an outside sale force is bad. That's it?

As for utility solar.....all anyone has to do is look at the value of utility companies in Germany to see what will become of ours. Even utility scale solar isn't saving them. Micro-grid solar farms will be widespread, but that's privately owned.

The biggest piece of value that SCTY is bringing in is the ability to build relationships with all these somewhat early adopters so they can sell them the next big thing. Once everything moves toward decentralizing, SCTY will be the IBM or Microsoft as mentioned above.

Chanos central thesis --his primary reason for shorting-- is he sees utility retail rates going lower then Solarcity 20 year contract holder rates and thus causing people to default on their payments. This is why he calls Solarcity subprime. It absolutely matters that he doesn't have a clue about the fact utility retail rates will by definition never undercut rooftop solar going forward because of technology innovations and rooftop retail rates becoming less then transmission costs. He says he sees a long term flaw in rooftop, but yet the fundamental long term flaw is in the centralized utiltiy model that is at issue here. His short is completely built upon a faulty premise. I imagine he will hold on as hard as he can, but he will fail.

Scty will ill not do what he wants, it's significantly under valued right now.

Lets wait and see what happens after the ink dries on the omnibus bill. Remember, president Obama has already said he approves, now it just has to get to his desk for signing. That is the moment of real truth for the big short positions out there.

 

[ClownMouth]

Would any of you guys be able to point a new SCTY investor to a few links/data points/blog posts that you'd consider to be the most beneficial in order to best understand the important pieces of the SolarCity story going forward. For example, over the last few years when I've talked with people about Tesla and can tell they are sincerely interested I always point them first to the Master Plan blog post from 2006. Fastest way to cut through the noise about Teslas being toys for rich people, etc. Also, Tesla Energy so they understand the story isn't just cars. The Gigafactory, Autopilot, etc...

Now that I have a position I want to do a deeper dive in case I'd want to add to (or lessen) my position as the story plays out or changes. For example, I did not know anything about Rive working on standard operating software as mentioned by Foghat above. These are the things I'm trying to get a grasp of that might not be obvious. Of course I plan to do my own research, but I'd be appreciative if anybody could point my in the right direction since like everyone, the time I can dedicate to research and listening to previous conference calls is limited. Thanks.

 

[dakh]

You've seen the analyst day presentation right? Events & Presentations - SolarCity look for 2015 Analyst Day

 

[TheTalkingMule]

Chanos central thesis --his primary reason for shorting-- is he sees utility retail rates going lower then Solarcity 20 year contract holder rates and thus causing people to default on their payments. This is why he calls Solarcity subprime.

Why anyone would ever think this is beyond me, it is a physical impossibility as energy becomes more decentralized. Again, Germany. As soon as they hit 5% solar(total supply), the entire profit margin of almost every legacy electricity producer was completely erased. If solar is taking up 30-50% of the demand at peak and all your profits were made at peak.......

Chanos wants me to believe rates will be lower when I can easily just look across the pond as the top three utilities are all begging the government to allow them to run the grid and divest entirely from production. One argument has a couple shorts advocating for it and the other has already happened.....in reality....in the 4th largest economy in the world.

 

[ClownMouth]

You've seen the analyst day presentation right? Events & Presentations - SolarCity look for 2015 Analyst Day

Thanks, dakh. Had that marked for reading but haven't gone through it yet...Does anyone think there are plans (possibility) to merge/acquire TSLA & SCTY at any point or will they most likely just work with one another?

 

[dakh]

Thanks, dakh. Had that marked for reading but haven't gone through it yet...Does anyone think there are plans (possibility) to merge/acquire TSLA & SCTY at any point or will they most likely just work with one another?

Watch the presentation, it's a bit long but I think it is still a time efficient way to get an intro into what these guys are all about. I for one didn't realize just how intensely they're focused on creating the best solar installation machine out there. They can well be a Tesla of solar installers already - at least a few years ahead of anyone else in organizational and technical efficiency.

 

[jhm]

Hey, Chanos, here's a list of 29 companies you may want to short. All the best, James

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