SolarCity’s next moment of truth is coming Monday afternoon, when the installer of solar energy systems will report its first-quarter earnings – and investors already are getting jittery.
SolarCity’s shares closed down by $2.80, or 10.59 percent, to $23.65 on Wednesday, its lowest level since late March, extending a decline that has seen the shares lose 30 percent of their value since April 21. The shares traded for more than $57 in mid-December, and have suffered a drop of 58 percent in just under five months.
The question on investors’ minds is whether SolarCity will meet its growth targets for the first quarter after falling short in the fourth quarter of last year and sharply scaling back its growth plans last fall.
Short seller Jim Chanos, who stands to make money from his investment in SolarCity if the stock goes down in price, went on CNBC on Wednesday to warn that he sees the company getting into “financial trouble” this year. That followed comments he made last year, calling SolarCity a “subprime” finance company, and predicting that its customers eventually will be unhappy with the leases they have on their rooftop solar systems as solar panel prices decline in the future.
But not everyone is down about SolarCity’s stock. The investment firm Guggenheim initiated coverage on SolarCity with a “buy” rating on the shares and a price target of $38. On Monday, CreditSuisse, which has one of the most bullish investment views on SolarCity, cut its price target for the shares to $62, from $89, but it continued to rate the shares as “outperform.”
When SolarCity reports its earnings after the stock market closes on Monday, it is expected to say that it has installed 180 megawatts of solar generating capacity during the first quarter, and is on target to install 1,250 megawatts of capacity during all of 2016.
The state, through the Buffalo Billion economic-development initiative, is spending $750 million to build a solar panel factory on South Park Avenue in South Buffalo for SolarCity, which has pledged to bring 2,900 jobs to the region, either at the factory or at companies that supply and provide services to it.