Big Insider Selling Coincides With SolarCity Analyst Downgrade

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SolarCity Corp. (NASDAQ: SCTY) has had several issues come up of late. Earnings (well, losses) took out about 8% of the value recently with light revenues, but on Tuesday a downgrade from Robert W. Baird took off almost another 2%. Now we have yet more news of insider selling which was seen.

As far as the downgrade goes from Tuesday, the solar installation giant was downgraded to a Neutral rating from Outperform, but the price target was left at $83.00. In the report, analyst Ben Kallo explains that SolarCity has gotten ahead of itself in terms of its stock price in regards to its competition, particularly in how it is positioned against peers.

An analyst downgrade is one thing, but big insider selling is another. Everyone knows Elon Musk, but they may not know the Rive brothers. They are the co-founders of SolarCity, and they are also Elon Musk’s cousin — and Musk is chairman of SolarCity.

On August 18, CEO Lyndon Rive sold 100,000 shares at $72.45 per share after exercising 30,000 options at $1.62 per share. This left him with 2,548,356 shares owned indirectly (options and the like). As we have always warned readers about insiders selling shares, these shares may be sold for a myriad of reasons and in this case it was under a planned share sale under a 10b5-1 planned share sale. Still, selling $7.2 million worth of stock is no small amount.

A large quasi-transaction had been seen just on Monday that a director named Nancy Pfund had disposed of some 1,790,293 shares. As it turns out, this was considered an in-kind distribution to members of Bay Area Equity Fund I, L.P. - under H&Q Venture Management. Another quasi-transaction came from venture capital firm Draper Fisher Jurvetson on August 4 for over 373,000 shares, but that was also an in-kind distribution to members.

Another sale was made by Chief Technology Officer and Director Peter Rive back on August 7. Some 83,023 options were exercised at $1.62, and some 125,000 shares were sold at $75.43 per share. That comes to over $9.42 million in sale proceeds. A different share sale was seen from Peter Rive on July 30 for 135,000 shares at $74.00 for $9.99 million — after exercising 30,200 options.

At $70.79, SolarCity has a 52-week trading range is $28.31 to $88.35, and the consensus price target is $85.36.

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