by Jim Heaney, editor of Investigative Post
I’ll dispense with the MayDay! declarations of past and get to the latest double-barrel dose of bad news regarding SolarCity.
The company released its first quarter earnings report Monday afternoon and it was drenched with more red ink than usual. SolarCity lost a record $283.1 million. That was double the $149.9 million it lost for the same period in 2015.
The stock market reacted as you’d expect, with the trading price dropping by 21 percent from the close of trading Monday to Tuesday. SolarCity is now going for $17.54 a share, down from $57.26 as recently as mid-December.
Yet another crisis in investor confidence was triggered by a worse-than-expected first quarter loss and downward projections on solar panel installations, which is the company’s bread and butter.
The company implicitly predicted more rough quarters ahead, dialing down its target for solar-power system installations this year. With fewer homeowners and businesses opting for a SolarCity solar-power array, the company will have trouble keeping its installation costs down.
After three-quarters of foiled expectations, SolarCity’s “credibility is likely at an all-time low,” analysts at Roth Capital said in a note to clients Tuesday.
“The company has a long, brutal road ahead of it.”
So, too, might New York taxpayers, considering that Gov. Andrew Cuomo has committed $750 million in state funds to build and equip the SolarCity plant in South Buffalo. That investment of public funds is looking riskier by the day, or, shall I say, subpoena, which apparently are being issued hand over fist as U.S. Attorney Preet Bharara expands his investigation into possible corruption involving a number of state economic development programs, including the Buffalo Billion.
I first documented SolarCity’s shaky finances a year-and-a-half ago and things have gone from bad to worse. Back then, the company was in the home stretch of a year in which it would lose what was then a record $375 million. SolarCity lost two-thirds that much in the first quarter of this year alone, and is on pace to lose more than $1 billion for the year, despite company projections to the contrary.
Buffalo Billion quarterback Alain Kaloyeros is keeping a stiff upper lip, telling The Buffalo News he is “not at all” concerned about SolarCity’s ability to live up to its deal to operate the plant and create nearly 3,000 direct and indirect jobs.
But it is not unreasonable to question the viability of SolarCity’s planned operations here.
The rollout of the plant is already behind the original schedule. The company’s future prospects grow bleaker with each passing quarter. Does it have the money, or the chops, to run the largest solar panel manufacturing plant in the Western Hemisphere? Will it even still be in business by the time the plant will open?