SolarCity (SCTY) Stock | A “Short” In Earnings and Guidance

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SolarCity Inc (NASDAQ: SCTY)

 

Thursday after the market closed, SolarCity, the closely watched solar installer founded by Elon Musk, reported disappointing financial results for the quarter ended September 2015, and lowered guidance fourth quarter of 2015.

 

SCTY Earnings and Outlook

SolarCity’s third quarter revenue came in slightly better than expected at $113.9 million which represented a 95% year-over-year increase. The company reported third quarter loss of $2.10 per share missing analyst’s forecast of $1.95 per share. SolarCity also lowered fourth quarter guidance, forecasting revenue in the $100 – $108 million range, down from prior forecast of $117 million, and increasing expected loss from $2.17 per share to a range of $2.60 – $2.75 per share. Barron’s

While Solar City has had a revolutionary impact on the growth of the solar industry, the company has never been profitable and has relied heavily of government subsidies that are declining.

 

CEO Comments

During the company’s conference call, CEO Lyndon Rive wrapped up his introduction by saying,

“Overall, I’m very excited about the business, and the strategy change. We’re now at this inflection point where we’re going to become cash flow positive by the end of 2016, and have a cost structure where the business can maintain cash flow positive in 2017 with a 10% accuracy.”  Yahoo Finance

 

SCTY Technical Analysis

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Looking at the big picture for SCTY, the stock has a moderate float of 50 million shares of which more than half of that (52.11%) is short. Since the stock has traded well above Thursday’s after-hours low of $30.12 for more than two years, it is likely that most if not all the shorts are in the money. Hence, I am watching for a profit taking induced short squeeze on Friday.

The stock closed Thursday at $38.11, and traded down after-hours to a two-year low of $30.12 before settling just below $31.00 per share. This will likely be a key level on Friday. As the stock gyrated down in after-hours trading, it found brief pauses at each of the half dollar and whole dollar levels. All of these levels should be watched and could be actionable. The stock has plenty of room to move in both directions and should provide lots of intraday trading opportunities.

 

About SolarCity Corporation

SolarCity Corporation (SolarCity) sells renewable energy. The Company integrates the sales, engineering, installation, monitoring, maintenance and financing of its distributed solar energy systems. It offers long-term energy solutions to residential, commercial and government customers. It offers its customers the option to either purchase and own solar energy systems or to purchase the energy that its solar energy systems produce through various contractual arrangements. The Company’s products, services and technologies include solar energy systems, customer agreements, grid control / energy storage systems, Zep solar mounting systems and software. The Company’s wholly owned subsidiary, Zep Solar, Inc. (Zep Solar) licenses its Zep Groove technology to photovoltaic module and power electronics manufacturers, and supplies the Company with complementary mounting and grounding hardware. The Company served customers in 15 states and the District of Columbia, United States. Google Finance

 

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