SolarCity, SCTY, Stock Trading Toward 52-Week Low On 10 kWh Powerwall News

Stock in SolarCity Corporation (NASDAQ: SCTY) traded down toward its 52-week low this week. Shares lost 14.0 percent and SolarCity saw $465 million in market capitalization erased. Stock would be at new lows now, if not for the one-day drop on August 24, when shares followed major market averages in a massive sell-off and rebound.

On April 30, Tesla Motors, Inc. (NASDAQ: TSLA) CEO Elon Musk announced the unveiling of a new energy storage product called the Powerwall, as reported by the Inquisitr. Musk’s mother is the twin of SolarCity CEO Lyndon Rive, making them cousins, according to the New York Times. Musk is also the chairman of SolarCity and Rive’s brother is chief technology officer, making the company a true family affair.

With the introduction of the Powerwall, Tesla announced the creation of a new subsidiary, Tesla Energy. Seven and 10 kWh Powerwalls were originally reported to be almost ready for purchase, without inverters, directly from Tesla for $3,000 and $3,500 respectively. Though Powerwalls can be used to store energy from utilities at off-peak times for use during peak times, potentially saving consumers money and also reducing strain on power grids, their real novelty is as power storage devices for use with solar panels. Power generated during daylight hours can be stored for use at night, making the Powerwall one of the first plug-and-play products of its type.

The 7 kWh units are not suitable for use with solar panels. Inside EVs reported that SolarCity was taking orders for the 10 kWh units complete with inverters. A nine-year lease with a $5,000 prepayment was available. Consumers could also choose to buy units with a 10-year warranty for $7,140. Which, comparatively, seems equivalent to paying $2,140 for the tenth year. It remains to be seen if a Powerwall has the capability to retain its storage capacity beyond 10 years.

At the April 30 Powerwall announcement, Musk indicated that units would ship between July 30 and August 30. Until a recent report from ARS Technica, it appeared that Tesla was not going to come close to meeting those deadlines. Now it appears that some 7 kWh units have shipped, but that the 10 kWh units, the ones that work with solar panels, will not be available until 2016.

So, the situation is one where the product that consumers got excited about, the 10 kWh Powerwall, and that SolarCity was taking orders for, is falling way behind schedule.

Most recent full year 2015 Wall Street consensus per SCTY share loss estimates are for $7.27, down 15 percent from $6.32 90 days ago, and have remained steady over the past week. Seventeen analysts are providing 2015 SolarCity estimates. How much of this move is related to Tesla’s and SolarCity’s inability to deliver Powerwalls is unknown. What portion of the current $7.27 loss number is attributable to expected Powerwall deliveries and installations, that are not happening, is also unknown.

The stock market is a forward-looking pricing mechanism. Often, stocks will trade up or down before analysts have the chance to revise EPS numbers. This week’s trading action in SCTY shares suggests that further downward revisions to SolarCity EPS numbers are possible.

Further, SolarCity stock appears to be under distribution. Since August 6, a distinct regime change is visible on SCTY price/volume charts. Shares are trading down on days with heavier volume and up on days with lighter volume, suggesting that institutional holders of SCTY shares are selling.

“Like Enron, SolarCity and the solar industry’s complex financing schemes could create a ‘bubble’ that will eventually burst and leave taxpayers exposed, argues a new report by the free-market Taxpayers Protection Alliance. SolarCity is a major player in this sketchy financial game,” the Daily Caller reported in March.

SolarCity offers customers the choice between outright purchase, loans, leases, and power purchase agreements (PPAs) that require consumers to have good credit ratings. Trying to estimate even a ballpark figure of how much each option will cost using information available from the SolarCity website seems just about impossible.

Launched in early August, Google’s Project Sunroof, by comparison, seems much more transparent and user friendly. Though it is only available in a few locations in the United States, consumers can enter their address and receive exact figures with regard to how much energy they could expect to generate from their specific building; how much different pricing options cost; and exactly, to the dollar, how much money consumers stand to save. Project Sunroof also works with a group of solar installation companies, ensuring some amount of competition and a greater assurance of fair prices and quality.

All of these factors combined are likely taking a toll on SolarCity stock. Most recent short interest data, at September 15, as reported by 24/7 Wall St., indicated that SolarCity carried 45.4 percent of its float sold short. Normally, such a high number would be a bullish indicator, but as suggested by this week’s stock trading action, it may not be in SolarCity’s case.

[Photo by Ethan Miller / Getty Images — Stock Chart Courtesy Venngage — Photo by Jerod Harris / Getty Images — Photo by Miguel Villagran / Getty Images]