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Tesla's Supercharger Team was recently laid off. We discuss what this means for the company on today's TMC Podcast streaming live at 1PM PDT. You can watch on X or on YouTube where you can participate in the live chat.
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TheTalkingMule
Distributed Energy Enthusiast
Lowered 2016 guidance from 1.25GW to 1-1.1GW.
Not sure why this wasn't revised last quarter when 1Q16 was revised downward.
Not sure why this wasn't revised last quarter when 1Q16 was revised downward.
TheTalkingMule
Distributed Energy Enthusiast
Sales costs up to $.87/W, that's a LOT and very surprising. Building out these new markets is expensive.
Edit: Pardon me. NINETY-SEVEN cents. Eating the cost of Nevada I assume? Would have liked to see sales cost without the NV shutdown.
Edit: Pardon me. NINETY-SEVEN cents. Eating the cost of Nevada I assume? Would have liked to see sales cost without the NV shutdown.
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TheTalkingMule
Distributed Energy Enthusiast
New zero-down loan options from SCTY, 10yr 3%, 20yr 5% with all the tax credit retained by the customer. Might have to peak at that if rates are <$3/W as mentioned on here previously, but I doubt they'll beat out my local installer.
dandurston
Member
Looks like I called the sales cost rise a few weeks ago. I guess they're not all on pure commission.
Overall there looks like a lot of positive stuff so the -20% seems a bit surprising. I like to read the ER, guess the move and then check the after hours quote. Until the reduced guidance I thought it was going to be a big move up despite the sales costs.
My take aways are:
- Exceeded 180MW target by a lot but whole year installs will be under 1.25GWh
- Costs up a shocking 19% per watt but due to temporary sales costs spike and should drop fast later this year
- PPA contracts can be sold for $3.24 minimum + SCTY retains ~$.33 worth of extension and 5% ownership to cover maintenance, so they're profitable now.
- In the future contracts will likely be sold for more while costs decline to $2.25 by year end.
- State by state regulations are still a huge unknown
Unless SCTY is tricking me with their complex math, it looks like there is growing evidence their business model works. If they really get close to $2.25/watt costs by years end that seems quite profitable.
I'd like to hear SBenson's take.
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The price action is very un-surprising. The slide desk is dense. I only took a cursory look and couldn't tell anything. In good old times there was just one metric to look at - RV and how that is progressing. Now we all know that it was just a lie. oh well, here I go again... In any case, the issue is - as an investor (or a potential investor) I don't even know what to look at or how to validate or value the business model anymore. In every single report Raymond James used to put a phrase like "Valuing SCTY is more of an art than science". It actually slowly progressed into becoming Abstract Art... Just as a pure academic exercise I will spend a day or two on it late this week. Will post if I find anything interesting.
TheTalkingMule
Distributed Energy Enthusiast
I could do without the guidance yo-yo'ing.
Feb16: Revise 1Q16 down to 180MW and maintain 2016 at 1.25GW
May16: Install 214MW in 1Q16 and revise 2016 down to 1-1.1GW
What good did the under-guiding 1Q16 do? None. They will easily hit the 1.25GW mark for 2016 and I'm pretty sure they know it. The more guidance transparency the better IMO.
Chanos will continue to be "correct" until he's not. He made a boatload of money, will cover at some point and then dive back in if he feels it's profitable. His commentary on fundamentals means nothing, he's sowing uncertainty and reaping the harvest each quarter. If you can't overcome a little bit of disinformation then either your valuation is fair based on execution or you're not expressing your value proposition properly.
I'll continue to bet on the Musk/solar combo obviously, but timing this thing for profit will continue to be a challenge. 1/3 of install costs are customer acquisition. Eating all the NV costs is a fair excuse, but a change of sales tactic is overdue. I have some thoughts on this, but will save them for next week.
Feb16: Revise 1Q16 down to 180MW and maintain 2016 at 1.25GW
May16: Install 214MW in 1Q16 and revise 2016 down to 1-1.1GW
What good did the under-guiding 1Q16 do? None. They will easily hit the 1.25GW mark for 2016 and I'm pretty sure they know it. The more guidance transparency the better IMO.
Chanos will continue to be "correct" until he's not. He made a boatload of money, will cover at some point and then dive back in if he feels it's profitable. His commentary on fundamentals means nothing, he's sowing uncertainty and reaping the harvest each quarter. If you can't overcome a little bit of disinformation then either your valuation is fair based on execution or you're not expressing your value proposition properly.
I'll continue to bet on the Musk/solar combo obviously, but timing this thing for profit will continue to be a challenge. 1/3 of install costs are customer acquisition. Eating all the NV costs is a fair excuse, but a change of sales tactic is overdue. I have some thoughts on this, but will save them for next week.
hockeythug
Active Member
I believe/hope you are absolutely correct. Unfortunately, Chanos is still correct on his short position for today and made crap load of $ right now. Hope he decides to let it ride and give it all back eventually. Either way, he gets to pound his chest and tell the world how credible he is for now... Chanos can have my scty calls that I lost today and suck it..... It's so funny I'm more mad about him making $ on his short scty than me losing 5 figures on my scty call options...
In my view, if Chanos doesn't cover his short tomorrow he's 100% crazy. The sentiment on TMC has never been more bearish. I'll be shocked if this end down anywhere near the after hours low. All this proves is that too many simple minded investors don't understand SolarCity's long term business strategy.
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Additionally, Chanos is a pathetic and disgusting parasite, who is worse than Donald Trump. He exists to boast on TV, and to cause harm to companies by misrepresenting the truth. If he was struck by lightning tomorrow, I would throw a party.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Don't be so soft on him.
TheTalkingMule
Distributed Energy Enthusiast
There's plenty to fret about this quarter, but install costs continue to drop year over year. A big drop for install costs on the November call would make me feel much better about my 2017/18 calls, we should see it continue to drift down this summer.
Don't worry about sales cost, most everyone is feeling that pinch in the US. 98% of consumers have completely incorrect information in their heads regarding the economic value of solar, all it takes is time to eat away at that. People aren't going to need 30 hours of hand holding to go solar a year from now.
Once logic and connection overpowers the disinformation machine the vast majority of that sales cost disappears. That's about $.60/W that SCTY can mine for profits. Then the gigafactory comes online.... Then these second tier markets get up to scale.....
Interested to see the Elon purchases next week and perhaps hear someone address the weird guidance numbers.
Don't worry about sales cost, most everyone is feeling that pinch in the US. 98% of consumers have completely incorrect information in their heads regarding the economic value of solar, all it takes is time to eat away at that. People aren't going to need 30 hours of hand holding to go solar a year from now.
Once logic and connection overpowers the disinformation machine the vast majority of that sales cost disappears. That's about $.60/W that SCTY can mine for profits. Then the gigafactory comes online.... Then these second tier markets get up to scale.....
Interested to see the Elon purchases next week and perhaps hear someone address the weird guidance numbers.
I despise Chanos, and all that he stands for. That said, today he bested me. Got to give the Devil his due.
But, a big Kim Kardashian But, I'm in for the long haul.
I'll be back.
But, a big Kim Kardashian But, I'm in for the long haul.
I'll be back.
I'll gladly take it a step further. If Chanos's gasoline vehicle got into a horrible accident and exploded with him in it, I'd throw an even bigger party. He's a cancer.
If I was a screenwriter, perhaps I would use him as the inspiration for a story about a parasite analyst who wakes up one morning as a giant cockroach. The story would end with the entire city running him out of town. Or perhaps him being hit by a passing freight train while being run out of town? The final scene would be a person in a Tesla driving by the incident and laughing.
Just for fun, this comes to mind. Obviously nothing borrowed from Kafka.
If I was a screenwriter, perhaps I would use him as the inspiration for a story about a parasite analyst who wakes up one morning as a giant cockroach. The story would end with the entire city running him out of town. Or perhaps him being hit by a passing freight train while being run out of town? The final scene would be a person in a Tesla driving by the incident and laughing.
Just for fun, this comes to mind. Obviously nothing borrowed from Kafka.
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jhm
Well-Known Member
I'm happy to see that SolarCity is righting the ship. They have made solid progress toward becoming cash positive. They are now monetizing 98% of cost. It was a disappointment to see sales cost climb to $0.97/W. Management believes this is transitory and will be rectified by Q3. So sales cost is about $0.50/W too high. As that is resolved, the monetization level will easily be above 100% and retained value will be a driver of cash.
Further it will be exciting to see grid services evolve. This has the potential to add 15 to 30 percent to existing customer derived revenue. This will substantially change the investment thesis for SolarCity. Full cost monetization moves the company to cash positive growth with long-term retained value. That's workable, but grid services will add near term profits to sweeten the whole deal for investors.
So my outlook is that SolarCity continues to have a few more difficult quarters as these pieces come together. It may be worth accumulating at very low prices through the summer, but early fall buying may be the best timing. No doubt this stock will be very sensitive to the election cycle. So be careful about bidding up the price anytime before election day.
Further it will be exciting to see grid services evolve. This has the potential to add 15 to 30 percent to existing customer derived revenue. This will substantially change the investment thesis for SolarCity. Full cost monetization moves the company to cash positive growth with long-term retained value. That's workable, but grid services will add near term profits to sweeten the whole deal for investors.
So my outlook is that SolarCity continues to have a few more difficult quarters as these pieces come together. It may be worth accumulating at very low prices through the summer, but early fall buying may be the best timing. No doubt this stock will be very sensitive to the election cycle. So be careful about bidding up the price anytime before election day.
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