Author Topic: SCTY - Solar City Corporation  (Read 26402 times)

awindenberger

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Re: SCTY - Solar City Corporation
« Reply #70 on: October 03, 2016, 01:35:43 PM »
Ben,

Thanks for the comments. I sort of agree with you on most of them.

1) Net metering is a bit of a free ride, but solar does also benefit the grid. Personally, i think that full credit is too high, but the avoided cost rate the utilities want to offer is too low. I'd say the fair approach long term would be to pay something down the middle between the two extremes.
I also believe that its fair for current customers to be grandfathered for the reminder of their contracts once net metering laws are changed. So far, we've seen that happen, even in Nevada.

2) Utility scale is cheaper...for the utility, but they don't seem to be dropping consumer rates much yet. Those plants are cheap to build, but you still need the transmission lines, and the utility wants a profit, so net cost to consumer is still similar.

3) I completely agree with you on this point. I too think long term electric rates will decrease due to solar and wind penetration. However, at higher penetration levels we will need more storage capacity, which will add to the final cost of electricity. So maybe we see utility rates continue to rise for the next 10 years, and then start to decline.

Interestingly enough, the NPV of a lease for the consumer that can't take advantage of the tax credit is even better compared to a purchase if we assume electric prices fall in the long term. Its counter-intuitive, but plays out when you consider the time value of the money saved at the beginning of the contract.


Also, my article on why solar leases are a profitable model for SCTY posted today:
http://seekingalpha.com/article/4009541-solar-leases-actually-make-money-solarcity

Curious for your thoughts.


benhacker

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Re: SCTY - Solar City Corporation
« Reply #71 on: October 03, 2016, 02:07:41 PM »
AW,

I think you seem to brushing aside some things or assuming away a lot (utility scale pricing being = residential, solar helping the grid... yes, but only up to a very small % I think... I may be wrong) - but honestly, this is fine, we may just simply disagree.

As to your article, I suggest only that you justify your equity investment with adjustments to SCTY's published and audited financials - basically, if SCTY is a profitable business inherently, you should back into that argument not brushing aside the 10-k, but altering the 10-k line items and adjusting them to get a pro forma... without doing that, it's challenging to have a discussion... It also will help silence the bears who generally start from audited financials... (perhaps you are doing this by just saying that SG&A can go WAY down, and underneath is a profitable biz... ok, but I think there is a question of if that SG&A spend was good, if not why not, what about their business model actually scales vs. comp, etc - maybe you have written about all this in different places, apologies if so)

Frankly, even assuming I agree with the SCTY bulls like yourself (which I don't), I find it difficult to understand the argument mathematically because it always ends up with "buy the stock" which makes negative sense to me.  If anything... you should be doing a synthetic long (short puts, long calls), or buying debt with a larger than common position size, or buying SSFs or whatever.  The borrow on this stock is 60%+ (was down a bit after TSLA merger, but back up again)... anyone buying the stock (and not lending it out) is leaving ~30-60% on the table... unless you are planning on holding for 2-3 months, this has to be a big deal...

That's probably all I have to say here.
« Last Edit: October 03, 2016, 02:20:47 PM by benhacker »
Ben Hacker
Beaverton, Oregon - USA

awindenberger

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Re: SCTY - Solar City Corporation
« Reply #72 on: October 04, 2016, 08:01:33 AM »
AW,

I think you seem to brushing aside some things or assuming away a lot (utility scale pricing being = residential, solar helping the grid... yes, but only up to a very small % I think... I may be wrong) - but honestly, this is fine, we may just simply disagree.

As to your article, I suggest only that you justify your equity investment with adjustments to SCTY's published and audited financials - basically, if SCTY is a profitable business inherently, you should back into that argument not brushing aside the 10-k, but altering the 10-k line items and adjusting them to get a pro forma... without doing that, it's challenging to have a discussion... It also will help silence the bears who generally start from audited financials... (perhaps you are doing this by just saying that SG&A can go WAY down, and underneath is a profitable biz... ok, but I think there is a question of if that SG&A spend was good, if not why not, what about their business model actually scales vs. comp, etc - maybe you have written about all this in different places, apologies if so)

Frankly, even assuming I agree with the SCTY bulls like yourself (which I don't), I find it difficult to understand the argument mathematically because it always ends up with "buy the stock" which makes negative sense to me.  If anything... you should be doing a synthetic long (short puts, long calls), or buying debt with a larger than common position size, or buying SSFs or whatever.  The borrow on this stock is 60%+ (was down a bit after TSLA merger, but back up again)... anyone buying the stock (and not lending it out) is leaving ~30-60% on the table... unless you are planning on holding for 2-3 months, this has to be a big deal...

That's probably all I have to say here.

Ben,

Perhaps my latest article will help you understand the SGA expenses more clearly.
http://seekingalpha.com/article/4009730-solar-installers-constant-losses-due-rapid-growth

The fact is that a large portion of SGA expenses are related to booking and installing more leases, so if the business were to go into run-off mode, SGA should go way down.

You do make a good point regarding lending out the stock. I don't have any experience doing this. What brokers would allow me to do this? I have accounts with Vanguard (IRA), TDAmeritrade (old thinkorswim account and also IRA) and IB.

benhacker

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Re: SCTY - Solar City Corporation
« Reply #73 on: October 15, 2019, 11:22:49 AM »
Thought I would post this follow up now that the pension litigation by TSLA holders against the company for the SCTY acquisition has revealed pretty substantively that SCTY was insolvent and nearly value-less at the time of the acquisition.

https://twitter.com/DanTelvock/status/1176558827602362368

Dan Telvock is a journalist in Buffalo who has been following Tesla Solar/Solarcity for a long time critically, and accurately (as an FYI).
Ben Hacker
Beaverton, Oregon - USA