Author Topic: SCTY - Solar City Corporation  (Read 26398 times)

jay21

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Re: SCTY - Solar City Corporation
« Reply #50 on: February 11, 2016, 08:14:22 AM »
SolarCity's ST debt is in part funded by Space X. Cant make this up.

All these entities might be terminal but shorting isnt my game so not spending the time.
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benhacker

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Re: SCTY - Solar City Corporation
« Reply #51 on: February 11, 2016, 09:57:31 AM »
Thanks for your comments picasso.

I agree that SCTY's cost for financing is lower if they want to dilute the hell out of shareholders (at least their upside) or secure the paper.

As a short, I hope they raise a lot of money to cap the downside for me.

I'm actually slowly exiting here... borrow rate rapidly rising and price tanking so I'm going to exit shortly. 

I think Musk may or may not save this company, but I think they *will* need to be saved. 
Ben Hacker
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Palantir

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Re: SCTY - Solar City Corporation
« Reply #52 on: February 11, 2016, 10:30:18 AM »
Ahmad Chatila will save them.
My Portfolio: AMZN, PYPL

opihiman2

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Re: SCTY - Solar City Corporation
« Reply #53 on: May 10, 2016, 02:41:19 PM »
This one may be going into as one of the "blow ups of this sub-section".  kevin4u2 is right, and I don't know why this was even discussed on here.  I think this one is a zero.  Almost everything about it is a stinker.  It has the jockey slant (Musk can do no wrong bullcrap) going on, huge debt leverage ratios, widening negative FCF, negative EPS every quarter, unsustainable gov't subsidies... 

Lesson learned: don't take on a Chanos short.


benhacker

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Re: SCTY - Solar City Corporation
« Reply #54 on: May 10, 2016, 02:50:03 PM »
Quote
This one may be going into as one of the "blow ups of this sub-section".  kevin4u2 is right, and I don't know why this was even discussed on here. 

Well, to be clear, the first post in this thread was in response to my post in TSLA thread that SCTY was a good short.  So I'm not sure this qualifies for your blow up / sub-thread analysis comment considering a short thesis was the kick off....  Also, I think most folks positing positive comments, weren't actually long, it was more in admiration for the things Musk was changing / commenting on. (certainly some exceptions)

Quote
I think this one is a zero.

I'm not so sure, but the business does seem to be fundamentally non-economic and dependent on capital markets.  I think $0 is within the realm of possibilities for sure.

I have no position right now.
« Last Edit: May 10, 2016, 03:03:50 PM by benhacker »
Ben Hacker
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opihiman2

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Re: SCTY - Solar City Corporation
« Reply #55 on: May 10, 2016, 10:53:35 PM »
Ah, ok.  It seemed from perusing the thread that this one was kind of an iffy long.  I didn't get the impression that anyone was trying to short it. 

Anyways, looks like a stinker.  Can't believe Morningstar is rating this crap three stars!  Actually, what is up with their ratings?  VRX is rated five stars.  Hahaha, holy hell.
« Last Edit: May 10, 2016, 10:56:04 PM by opihiman2 »

awindenberger

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Re: SCTY - Solar City Corporation
« Reply #56 on: May 11, 2016, 06:30:47 AM »
Solar City has been overpriced for much of its life, but the company is worth something. I havent decided exactly what that number is, but its higher than zero.

The issue is that the company is spending money upfront to generate a 20-30 year income stream. In order to do that and grow quickly, they are but definition going to need to raise a lot of debt, and the upfront costs will massively outweigh near term revenue, leading to massive GAAP losses in the short term.

However, the company could be cash flow positive by simply ending growth plans. They could cut all the sales staff, a large portion of the G&A, and simply collect payments on their existing 2GW worth of systems. These payments are contracted to go up by about 2% every year, and as long as they cost less than the price from the utility, SCTY customer's don't have any real reason to revolt against the payments.

2GW worth of systems generates an average of $400mil in annual customer payments (it starts off around $330mil). Over 20 years that is $8Bil in customer payments rolling in. Those payments are used to pay tax equity investors, interest, and ongoing maintanance, with the remaining amount being the final cash flow to SCTY.

SCTY notes that at 6% discount rate, the NPV of the contracted cashflows (20 years) is $2,766M. At 8%, its $2,314M.

Extrapolating that to 10% discount rate is about $1.8Bil.

SCTY's market cap is currently $1.75Bil.

This means the market is currently ascribing negative value to the DevCo, as well as to any renewal cashflows the company is able to generate past the 20yr contract term.

There are many variables to consider looking out 20yrs, but at current prices, I would not want to be starting a short on SCTY.

benhacker

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Re: SCTY - Solar City Corporation
« Reply #57 on: May 11, 2016, 07:16:13 AM »
Quote
SCTY notes that at 6% discount rate, the NPV of the contracted cashflows (20 years) is $2,766M. At 8%, its $2,314M.

Extrapolating that to 10% discount rate is about $1.8Bil.

SCTY's market cap is currently $1.75Bil.

This means the market is currently ascribing negative value to the DevCo, as well as to any renewal cashflows the company is able to generate past the 20yr contract term.

There are many variables to consider looking out 20yrs, but at current prices, I would not want to be starting a short on SCTY.

If you believe the above $1.8B value is net of debt, you can buy near term SCTY converts at $50 on the dollar, yielding (YTM) 25% which get paid ahead of common.

They seem like an eminently better bargain than the stock, unless you can lend the short borrow out at 80-100% of full value.
« Last Edit: May 11, 2016, 07:32:25 AM by benhacker »
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awindenberger

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Re: SCTY - Solar City Corporation
« Reply #58 on: May 11, 2016, 10:42:57 AM »
Quote
SCTY notes that at 6% discount rate, the NPV of the contracted cashflows (20 years) is $2,766M. At 8%, its $2,314M.

Extrapolating that to 10% discount rate is about $1.8Bil.

SCTY's market cap is currently $1.75Bil.

This means the market is currently ascribing negative value to the DevCo, as well as to any renewal cashflows the company is able to generate past the 20yr contract term.

There are many variables to consider looking out 20yrs, but at current prices, I would not want to be starting a short on SCTY.



If you believe the above $1.8B value is net of debt, you can buy near term SCTY converts at $50 on the dollar, yielding (YTM) 25% which get paid ahead of common.

They seem like an eminently better bargain than the stock, unless you can lend the short borrow out at 80-100% of full value.

I like both of those ideas.

Liberty

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Re: SCTY - Solar City Corporation
« Reply #59 on: May 11, 2016, 11:03:40 AM »
Likelihood that this gets taken private?
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