Another Mayday! for SolarCity

Reporting, analysis and commentary
by Jim Heaney, editor of Investigative Post

I wrote a post back in October about SolarCity’s mounting losses and falling stock price that carried the headline “SolarCity: Mayday! Mayday!”

My post was prompted by a record loss in the third quarter that sent the company’s stock price down to $38 a share.

SolarCity yesterday reported another huge loss for the fourth quarter that resulted in a year-end loss totaling $710 million. As in almost three-quarters of a billion dollars.

The stock market responded by dumping SolarCity shares, dropping the price to $26.35 at the close of trading Tuesday. Things went from bad to worse overnight Tuesday and again Wednesday, when the stock closed at $18.52. (Update as of 11 .m. Thursday: Stock has dropped further, to $17.54.)

Keep in mind that SolarCity stock was selling for nearly $57 a share in December and peaked two years ago at nearly $82 a share. You can follow the stock price here.

With all this said, I guess it’s time to put out another Mayday!

Industry analysts are divided on SolarCity’s long term prospects.

Some believe the company is well positioned for the long run because it’s the nation’s biggest solar panel installer. Others see SolarCity as a company in deep trouble with a flawed business model in a volatile industry.

(Update) The New York Times published a story on the solar industry Thursday that focused on SolarCity.

SolarCity, the nation’s largest provider of rooftop systems, is but the most visible of a cluster of companies, built with the aid of government subsidies and utility incentives, now facing deep uncertainties, despite unflagging consumer interest and surging growth in renewable energy …

Solar panels have been around for decades, but the businesses and methods that have propelled their fast spread across rooftops in the last five or six years are still new and untested. Many of the assumptions that underpin the financial models are far from certain, analysts and experts say, and as market conditions, public policies and technologies evolve, the risks are becoming more evident.

My original reporting on SolarCity back in October 2014 found reason for pause, as well.

(Update, 11:45 Thursday:) Seeking Alpha offers these updates. 

If the last few days haven’t been tough enough, news broke Wednesday that full production of the SolarCity plant in Buffalo will be delayed by three to six months, to the summer of 2017. That’s even though plant construction will be completed by this fall.

The official reason cited for the delay involves longer-than-expected delivery times for manufacturing equipment. One can’t help but wonder if finances aren’t somehow an issue, however.

Indeed, there was more grim news inside SolarCity’s annual report filed with the SEC beyond the mounting operating losses. Take a look.

Amid all this bad news and uncertainty, it’s becoming increasing clear that Gov. Andrew Cuomo took a big risk with taxpayer money to build SolarCity a $750 million plant.