Energy

SolarCity Shares Rocked by Big Loss, Worse Guidance

Paul Ausick

Published: October 29, 2015 4:36 pm

Last Updated: January 13, 2020 5:45 pm

SolarCity Corp. (NASDAQ: SCTY) reported third quarter 2015 results after markets closed Thursday afternoon. For the quarter, the solar PV installer posted an adjusted diluted net loss per share of $2.10 on revenues of $113.86 million. In the same period a year ago, the company reported a net loss per share of $0.75 on revenues of $58.34 million. Third-quarter results compare to the Thomson Reuters consensus estimates for a loss per share of $1.95 on revenues of $111.43 million.

For the fourth quarter the solar company expects revenues of $70 to $76 million in its operating lease and solar energy systems division, an increase of 48% year-over-year for the quarter. Solar energy system and component sale revenues are pegged at $30 to $32 million for the quarter. Adjusted loss per share is now estimated at between $2.60 and $2.75. The current analyst estimates call for a loss of $2.17 on revenues of $117.84 million.

Regarding next year the company said it is “focusing our strategy on cost reductions and cash flow.” Here’s a passage from the shareholder’s letter:

Specifically it is our goal to achieve positive cash flow by 2016 year-end and be in solid shape prior to the planned ITC expiration in 2017. We expect to continue to lead the industry in MW Installed with the lowest costs and strong returns, and we expect GAAP operating lease revenues to grow in excess of 70% year-over-year in 2016. In turn, we will be even more selective in the markets and projects we enter into. As such, we are introducing preliminary 2016 guidance of 1.25 GW Installed, representing a healthy year-over-year growth of approximately 41% as compared to the midpoint of our 2015 guidance. We also expect to announce meaningful reductions to our 2017 cost targets by our next earnings call.

SolarCity may have waited to long to change its focus from growth at any cost to reducing costs and emphasizing cash flow. The Q4 outlook for adjusted net loss and the lack of specific actions to address costs will absolutely slaughter the stock price tomorrow.

Shares are down nearly 16% in Thursday’s after-hours session at $32.13, well below the 52-week low of $34.65. The 52-week high is $63.79 and the consensus price target is $74.13.