SolarCity Corp

For 3Q16, Sunrun’s (RUN) consolidated revenue came in at ~$112 million against analysts’ expectations of $135 million.

SolarCity’s product offerings include solar energy, solar energy systems, in-house manufacturing of solar system components, and energy storage systems.

Vivint Solar has witnessed rapid growth since inception with installed capacity reaching 129.7 megawatts as of June 30, 2014. The company went public on October 1, 2014.

Extreme climate change events hamper productivity, thus affecting industries such as agriculture, fishing, energy, trade, transportation, and tourism.

SolarCity posted mixed results for 1Q16. The company reported adjusted EPS of -$2.56 compared to the analyst consensus EPS estimate of -$2.31.

First Solar (FSLR) rose 5.7% yesterday after 195 nations attending the Paris climate change conference reached a historic agreement to cut emissions to address climate change.

SolarCity is a vertically-integrated solar company. Despite advancing technology and expanding reach, it has seen negative earnings most years since 2007.

Following 2Q16, major downstream solar companies such as Sunrun, SolarCity, and SunPower have revised their 2016 guidances downward.

Sunrun (RUN) announced its 1Q16 earnings results on May 12, 2016. In this series, we’ll look at the 1Q16 results, compare them with analysts’ estimates, and see the factors behind deviations.

Wall Street analyst consensus estimates suggest a whopping 106% upside for the four biggest renewable energy companies.

SolarCity was founded in 2006 with the initial focused on selling, financing, and installing solar energy systems for residential and commercial customers.

Sunrun was co-founded in 2007 as a startup by Ed Fenster and Lynn Jurich, with an aim to create worldwide use of solar energy. It began offering solar services in 2008.

All ten solar players on our coverage list fell during the week. The SPDR S&P 500 ETF fell 0.5% during the same week.

Among the downstream solar companies, SolarCity (SCTY) has the highest EV-to-sales value of 8.70x, which is closely followed by Vivint Solar at 8.31x.

Wall Street analyst consensus estimates suggest a whopping 88% upside for these four renewable energy companies as of January 12, 2016.

Of the six analysts covering Vivint Solar (VSLR) stock, two have given the company a “buy” rating, two a “hold” rating, and two a “sell” rating.

Jim Chanos, the billionaire investor and a well-known short seller in the hedge fund industry, said at the Delivering Alpha Conference on Tuesday, September 12, 2017, that he is continuing his short position in Tesla (TSLA).

In this series, we will perform a comparative analysis of downstream solar companies’ 1Q16 earnings and SunPower’s downstream operations. We will take a close look at its management’s guidance and analyst expectations for 2016.

Jim Chanos, a prominent short seller, discussed his view on Tesla in a recent interview with CNBC. He has a short bet on Tesla (TSLA) and said, “we think the equity is worthless.”

Since the release of SolarCity’s 2Q16 results, three of the 15 analysts covering the stock lowered their price targets.

Of the 11 analysts covering Sunrun (RUN) stock, nine analysts (81.8%) gave the company a “buy” rating. Two analysts (18.2%) rated it a “hold,” and there weren’t any “sell” ratings on Sunrun’s stock on November 4, 2016.

Between its 2Q16 earnings release on August 9 and October 21, 2016, SolarCity’s stock price fell nearly 19%.

Wall Street analysts’ consensus estimates suggest a combined upside of 137% for FuelCell Energy, SolarCity, Plug Power, and EnerSys

SolarCity initially raised funds through the issue of warrants to investors on preferred stock. It also raised capital through a range of investment funds.

After the merger with SolarCity (SCTY), Tesla’s valuation multiples will depend on the growth potential of its energy business.

The extension of the investment tax credit for owning eligible solar systems and a decrease in solar hardware prices provide a strong growth opportunity for downstream solar companies.

SolarCity’s financing services aim to provide minimal up-front costs with multiple funding options, which allows customers to choose and enjoy tax credits.

Moving ahead, Sunrun (RUN) expects to deploy about 285.0 megawatts in fiscal 2016—compared to 202.9 megawatts in fiscal 2015.

Jim Chanos has a bearish view on Tesla, as he’s not satisfied with the company’s fundamentals or the various organizational changes.

In 3Q17, Vivint Solar (VSLR) posted $34.7 million as its cost of revenue for its operating leases and incentives, higher than the $33.8 million in 2Q17 but lower than the $39.3 million in 3Q16.

Vivint Solar reported $75.1 million in consolidated revenue for 3Q17 compared to $73.0 million in 2Q17 and $41.3 million 3Q16.

Vivint Solar (VSLR) reported a cost per watt of $2.94 for 3Q17, higher than the $2.88 it reported in 2Q17 and $3.85 in 3Q16.

On January 16, 2017, Tesla’s consensus 12-month target price was $238.75 with just 0.4% upside potential from its market price of $237.75.

In October, Tesla unveiled the second version of the Powerwall and Powerpack. The second version comes with higher energy storage capacity.

On June 21, Tesla revealed its intentions to acquire SolarCity. On June 22, Tesla’s stock closed at $196.66 with a massive loss of 10.5% during the session.

For the coming quarter, analysts expect Sunrun’s (RUN) revenue to be ~$130 million, and they expect significant improvement in company revenue in the latter half of 1H17.

Sunrun (SUN) reported an operating loss of ~$51 million for 3Q16 compared to an operating loss of $48 million in 2Q16 and $63 million in 3Q15.

Sunrun (RUN) announced its 3Q16 earnings results on November 10, 2016, after market hours. Sunrun reported earnings per share of $0.16, compared to analysts’ consensus EPS estimate of -$0.20.

Vivint Solar (VSLR) reported $39.3 million in operating leases and incentives revenue costs for 3Q16 compared to $38.5 million in 2Q16 and $37.6 million in 3Q15.

Vivint Solar (VSLR) reported a record low cost per watt of $2.85 for 3Q16 as compared to $2.94 in 2Q16 and $3.12 in 3Q15.

Sunrun’s (RUN) gross profit for 2Q16 came in at $22.3 million. For 3Q16, analysts expect the company to report a gross profit of $23.3 million.

Analysts estimate that Vivint Solar (VSLR) will report revenue of $44.0 million in 3Q16, which is almost a 26.0% rise on a quarter-over-quarter basis.

SolarCity’s interest expenses have risen more than fourfold in the last two years.

FBGRX has had a below-average 2016 so far, placing seventh in our select peer group of 12 funds in terms of point-to-point returns.

As the downstream solar industry is still in its growth phase, operating losses are common among incumbent players.

SunPower (SPWR), Sunrun (RUN), Vivint Solar (VSLR), and SolarCity (SCTY) all reported their revenues beating analysts’ 2Q16 revenue expectations.

For 2Q16, SolarCity reported its MW (megawatts) installed at 201 MW, compared to 214 MW in 1Q16 and 189 MW in 2Q15.

For 1Q16, Sunrun’s creation cost per watt was $4.11 compared to $3.64 in 4Q15. Its built install cost was $2.36 compared to $2.33 in 4Q15.

Vivint Solar reported its total cost per watt as $3.34 for 1Q16 compared to $3.12 in 4Q15. Uncertainty about its net metering system increased customer acquisition cost.

Tesla Motors (TSLA) is set to acquire SolarCity in an all-stock transaction. SolarCity’s shareholders will receive 0.11 shares of Tesla Motors for each share of SolarCity.

Vivint Solar (VSLR) reported $17.2 million in consolidated revenue for 1Q16 and $16.1 million for 2Q15. Analysts estimate 2Q15 revenue of $25.0 million.

Stock picks from the healthcare sector are primarily responsible for FBGRX’s poor showing YTD. Allergan has hurt the sector, with Regeneron and Celgene.

As of March 31, 2016, SolarCity (SCTY) had about $3.2 billion in consolidated debt on its books. Of the $3.2 billion, ~$1.5 billion was total recourse debt.

According to Tesla’s (TSLA) SolarCity acquisition proposal, it’s ready to pay $26.50 to $28.50 per share for SolarCity.

SolarCity’s wide network of sales and distribution channels and customer-friendly financing products are expected to benefit Tesla and its customers.

The downstream solar business is all about capturing market share. Because the solar lease contracts and power purchase agreements typically last for 20 years, a company with higher market share in the mature stage could get more revenue than the company with lower market share.

Sunrun (RUN) reported the cost of operating leases and incentives as $38.1 million for 1Q16 compared to $21.4 million in 1Q15.

SolarCity (SCTY) reported $123 million in 1Q16 revenue against analysts’ consensus estimate of $113 million.

Moving ahead, SolarCity’s newly launched residential solar (TAN) loan offering could help the company in reviving its bookings in the short term.

SolarCity (SCTY) reported about $115 million in consolidated revenue for 4Q15. Analysts estimate that it will report revenue of $113 million in 1Q16.

Of the eight analysts covering Sunrun (RUN) stock, six analysts, or 75%, gave the company a “buy” rating. Two analysts, or 25%, rated it a “hold.” There weren’t any “sell” rating on Sunrun’s stock.

Downstream solar players like SolarCity (SCTY) depend on a wide variety of state and federal tax credits, incentives, and rebates to expand their businesses.

As of December 31, 2015, the cumulative installed capacity of SolarCity stood at 1,945 MW as compared to Sunrun’s 596 MW and Vivint Solar’s 459 MW.

Business expansion is crucial for companies like SolarCity, which intends to expand its presence via partnerships with homebuilders and industry leaders.

The much-debated issue of net metering saw an interesting development this week when six New York utilities and three solar companies proposed a solution.

The downstream solar business is capital intensive and requires companies like SolarCity to hold huge upfront capital for the sale of products and services.

The majority of SolarCity’s customers are individual homeowners. Residential installations in 4Q15 came in at 221 MW, as compared to 203 MW in 3Q15.

Key operational metrics such as megawatts deployed allow us to compare the operational performances of downstream solar companies like SolarCity.

Government incentives, environment regulations, seasonal changes in energy demand, and cost factors are among SolarCity’s biggest performance drivers.

SolarCity began its journey in 2006, with a vision to provide renewable energy to residential and commercial customers at a price lower than utility rates.

ITCs (investment tax credits) are dollar-for-dollar reductions on income taxes. These apply to the residential and commercial deployment of solar systems.

SolarCity’s business is divided into two segments: Operating Leases and Solar Energy Systems Incentives and Solar Energy Systems and Component Sales.

Among the seven firms covering the Sunrun stock, Credit Suisse is most bullish on the stock, with a price target of $21 assigned on March 21, 2016.

Sunrun (RUN) expects to deploy about 285.0 megawatts (or MW) in fiscal 2016, compared to 202.9 MW deployed in fiscal 2015.

One out of four analysts covering Vivint Solar (VSLR) has rated the stock a “buy,” two analysts rated the stock a “hold,” and one analyst recommends a “sell” for the stock.

Sunrun is required to maintain the quality of its assets to raise capital at low cost.

On March 7, 2016, Vivint Solar terminated its merger agreement with SunEdison (SUNE) because SunEdison failed to consummate the acquisition in time.

The elimination of net metering system in Nevada affected the expansion plans of Vivint Solar and also led to the market exit of its peers Sunrun and SolarCity.

Vivint Solar intends to expand its presence in existing solar markets and penetrate into new markets by leveraging its brand presence and customer base.

Vivint Solar reported $64.18 million in consolidated revenue for fiscal 2015 compared to $25.25 million during fiscal 2014.

ITCs (investment tax credits) are a dollar-for-dollar reduction on an income tax bill. It is applicable to both residential and commercial deployment of solar systems.

Vivint Solar’s business model is divided into two revenue segments: Operating Leases and Incentives and Solar Energy Systems and Product Sales.

Unlike its peers, Sunrun is building an open platform of services and tools to provide a differentiated customer experience and, at the same time, gaining a wide customer base.

Sunrun reported $111.78 million as the cost of operating leases and incentives segment for fiscal 2015 compared to $72.89 million in fiscal 2014.

On March 10, 2016, Sunrun launched a new product, BrightBox. It is the first time that the company will be offering energy storage facility to homeowners.

In February 2014, Sunrun (RUN) acquired the residential business of REC Solar, AEE Solar, and SnapNrack from Mainstream Energy Corporation for $78.8 million.

Investment tax credits are dollar-for-dollar reductions in an income tax bill. It is applicable to both residential and commercial deployment of solar systems.

Extension of ITCs for investments in solar energy has been key for the rapid expansion of downstream solar companies like Sunrun, Vivint Solar (VSLR), SolarCity (SCTY), and SunPower (SPWR).

The business model of downstream solar players like Vivint Solar generate income over the term of customer agreements, which typically last for 20 years.

Vivint Solar’s estimated nominal contracted payments remaining increased by $251.4 million during 4Q15, compared to $214 million during 3Q15.

FuelCell Energy (FCEL) is trading 42% below its 100-day moving average, as of yesterday’s close. In comparison, SolarCity (SCTY) is trading 25% below its 100-day moving average.

Wall Street analysts’ consensus estimates suggest a whopping 112% upside for renewable energy companies FuelCell Energy, Solar Energy, Power Plug, and EnerSys.

Sooner or later, a shift will likely take place from non-renewable to renewable energy sources that offer sustainable growth potential for businesses.

SolarCity’s debt grew by 340% while EnerSys’s and Plug Power’s debt grew by 60%.

The Guggenheim Solar ETF and the VanEck Vectors Global Alternate Energy ETF are trading 4% and 3.9% above their respective 100-day moving averages.

The Guggenheim Solar ETF, the PowerShares WilderHill Clean Energy ETF, and the VanEck Vectors Global Alternate Energy ETF invest in renewable energy.

Plug Power (PLUG) and SolarCity’s (SCTY) sales grew by 140% and 56%, respectively, on a YoY (year-over-year) basis in fiscal 3Q15.

The FCF (free cash flow) is what’s left after the total capital expenditures from operating cash flows are spent.

Clean energy was one of the important issues in the Paris Climate Agreement. Fuel cells produce clean energy from a chemical reaction between anodes and cathodes.

Experts think that OPEC (Organization of the Petroleum Exporting Countries) already sees the threat from solar and other non-fossil fuel energy sources.