Author Topic: SCTY - Solar City Corporation  (Read 26401 times)

benhacker

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Re: SCTY - Solar City Corporation
« Reply #60 on: May 11, 2016, 11:31:44 AM »
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Likelihood that this gets taken private?

0-1% chance in my mind.  I could see a combination with another Musk businesses for stock, maybe.

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I like both of those ideas.

If you guys think go private or SCTY's estimate of NPV here of the business are even in the realm of credible outcomes in reality, you should be long these bonds up to your eyeballs, I'm serious.

If you are *not* long these bonds, I'd love to know why.

Sorry if I sound like I'm pushing here, but I really find opinions on these boards hard to gauge.  If folks talk up a business as "good" or valuable, but aren't buying 25% YTM debt... well, I kind of want to disregard everything they say about this or any other business... you have that many high probability ideas yielding 25% with a near term rock hard catalyst (maturity)???

My 2 cents.  I'd rather know what folks *actually* do with their money, then what folks talk about doing in a theoretical world... maybe... with their money. :)

By the way, my comments go double for Ophiman who comes in here after the stock is crushed and calls it a zero... I mean, we all have opinions, but I think the weight of all of our opinions should be reduced about 95% if we don't / aren't willing to put $$$ behind them being "right".

(says the guy with no current position in SCTY... I know.   But I did have one for much of last year and this year.... too hard now w/ current price + borrow for me).

Ben Hacker
Beaverton, Oregon - USA


awindenberger

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Re: SCTY - Solar City Corporation
« Reply #61 on: May 11, 2016, 12:06:49 PM »
Quote
Likelihood that this gets taken private?

0-1% chance in my mind.  I could see a combination with another Musk businesses for stock, maybe.

Quote
I like both of those ideas.

Sorry if I sound like I'm pushing here, but I really find opinions on these boards hard to gauge.  If folks talk up a business as "good" or valuable, but aren't buying 25% YTM debt... well, I kind of want to disregard everything they say about this or any other business... you have that many high probability ideas yielding 25% with a near term rock hard catalyst (maturity)???

My 2 cents.  I'd rather know what folks *actually* do with their money, then what folks talk about doing in a theoretical world... maybe... with their money. :)

Its a fair question. I don't have any position on SCTY because each time I see it this low, I decide I need to look more into it, and then within a couple weeks its back higher than I'm interested in buying at, so I don't finish focusing on it.

I've never looked much into bonds. Its something I should do more of, but none of the brokers I use make it a click to buy process, so I haven't dealt with them as investment options.

Picasso

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Re: SCTY - Solar City Corporation
« Reply #62 on: June 21, 2016, 02:22:11 PM »
Musk invested in a business of the Rive's before 2008 hit.  When that business was sold in 2008 and Musk received his share, it was a nice size windfall that 100% saved Tesla and SpaceX.  His companies would have failed without the success of his cousins.  On that alone, I don't think you'll see SCTY hit $0.  I'd like to think that Musk would get involved and help resolve any SCTY capital issues as long as there aren't the kind of defaults that guys like Chanos are expecting.  Not even Musk could resolve that.  But Tesla is going to be dependent on SCTY being a viable business since their energy business is paired up in the big way with SCTY. 

Tesla offering to buy Solar City.  I think I'll need to close Twitter for a couple weeks...  It's going to get pretty unbearable.

valueinvesting101

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Re: SCTY - Solar City Corporation
« Reply #63 on: June 21, 2016, 02:24:40 PM »
http://www.cnbc.com/2016/06/21/tesla-makes-offer-to-acquire-solarcity.html

There is 39% short interest in solar city

Acquiring at close to $2.75 billion. Almost the amount Tesla raised in FPO in mid-May

fareastwarriors

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Re: SCTY - Solar City Corporation
« Reply #64 on: June 21, 2016, 02:56:44 PM »
Whoa....

Broeb22

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Re: SCTY - Solar City Corporation
« Reply #65 on: June 22, 2016, 06:13:17 AM »
It's a stock deal, so how much money they raised a few months ago is pure coincidence.

TwoCitiesCapital

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Re: SCTY - Solar City Corporation
« Reply #66 on: June 22, 2016, 10:30:09 AM »
http://www.reuters.com/article/us-solarcity-m-a-tesla-idUSKCN0Z72WP

Musk may be a genius, but he doesn't appear to have much concept of numbers/valuations if he thinks that the combination of TSLA (a $29B company) and SolarCity ( a $2B company) is likely to create a trillion dollar business...

I mean, I already thought TSLA's $29B was a little shaky...

Oreo

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Re: SCTY - Solar City Corporation
« Reply #67 on: June 22, 2016, 01:22:31 PM »
Was short TSLA on-and-off since 2014 but I can't find good borrow to short at these levels. Anyone seeing borrow, and if yes, at what cost?

awindenberger

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Re: SCTY - Solar City Corporation
« Reply #68 on: October 01, 2016, 09:37:12 AM »
BenHacker's asked me to discuss why I like SolarCity here, as we were talking a bit about it on the Tesla board.

In short, my analysis indicates that on average, solar leases are not actually the terrible deal they are made out to be, because there are many consumers that can't take advantage of the ITC credit anyways. See my SA article on this matter: http://seekingalpha.com/article/4007021-solarcity-deep-dive-solar-leases-make-surprising-amount-sense-least-45-percent-americans

Thus, I think demand for SCTY's core product will remain strong until the ITC expires in 2022.

I also believe that SCTY's business model is better than people give it credit for. I have an article that goes into that which should be published in the next day or two on SA, so I won't bother repeating myself but will instead link to it when it comes out.

benhacker

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Re: SCTY - Solar City Corporation
« Reply #69 on: October 02, 2016, 12:12:43 PM »
Hey AW, I think the analysis in the SA article misses a couple of points, but I appreciate you sharing.

1) *all* solar solutions (whether retail or utility scale) rely on backup / storage.  In the case of current implementation of resi solar, there is a regulatory free ride (net metering) that I think is a hidden tax on non-solar users which should and will be terminanted.  I think not baking that effective battery / storage cost into the equation is problematic for the real value creation measurement.  I think this alone will make your math non-economic.

2) Utility scale solar makes eminently more sense than resi solar in most cases.  Further, with wholesale cost for these installations pushing <$0.05kwh *all in* costs, I think the analysis using CA residential retail pricing is not remotely close to reasonable (I pay $0.11 for example just a bit North).  I am a huge believer in solar, I just don't think resi solar makes much sense unless massively subsidized (net metering, ITC, etc)

3) Finally, and I think perhaps most importantly, I think as solar gains scale in the US, overall electricity prices will DECLINE.  Your analysis assumes a 1% annual rise in power costs - seemingly conservative - but when marginal cost for utility scale is $0.05, and serious pressure on coal pricing, natural gas, etc, I don't see a scenario where power prices rise substantially.  I think as you look out a few more years, you will begin to see a wave of regret from folks who have 1-3% annual escalators built into their solar power purchase agreements while power prices start to decline overall... when this happens I think there will be investigations into sales tactics, defaults, and overall legal unpleasantness - I don't expect this to be a big issue, but small things can snowball.

There are several other issues I have with resi solar, and SCTY specifically (GSE treatment of leases, highly capital markets dependent model with limited scale, overcharging / accounting for system cost and legal issues related to that, related party conflicts, valuation), but mostly, the above 3 issues are the big ones.

I wish you the best, and my opinion should be discounted as I don't feel strongly enough right now to have a position like you do.

Thanks,
« Last Edit: October 02, 2016, 12:30:41 PM by benhacker »
Ben Hacker
Beaverton, Oregon - USA