By Jeff Siegel
DISCLOSURE: Long SCTY.
Well, SolarCity’s (NASDAQ:SCTY) latest news probably won’t be enough to silence the bears and scare off shorty, but it has stopped the bleeding a bit.
After falling more than 25% over the past month, SCTY has stabilized after announcing a new loan program that will allow customers to buy a solar energy system outright instead of leasing a system.
Thanks to the company’s massive scale and low cost of capital, SCTY will now lend directly to customers. This is a huge advantage over having customers seek out loans provided by third-party banks. And as far as I know, no other installer offers such an option.
Users of the company’s new loan program, called MyPower, will also still benefit from SolarCity’s 30-year warranties, production guarantees and monitoring services.
Bank of America analyst Krish Sankar chimed in on the news today, reiterating his buy rating and $95 price target on the stock. Of course Sankar also noted that the loan product was expected.
In any event, SCTY is still going to be a roller coaster ride throughout the rest of the year. Many of those who bought at the top are likely going to sell in an effort to offset capital gains liabilities for 2014. But folks like me, who bought in on the dip and see the long-term potential of SCTY will hold tight, and maybe even pick up more while the stock is still relatively cheap.
Also worth noting today is the recently renewed partnership between SolarCity and Honda (NYSE:HMC) to finance $50 million in new solar projects for Honda and Acura customers and dealerships in the U.S.
This is actually a pretty big deal, but the news is getting overshadowed by SCTY’s new loan announcement.
Nevertheless, I remain bullish on SCTY and see any major dips below $70 as a buying opportunity.
Jeff Siegel is Editor of Energy and Capital, where this article was first published.
It is becoming more and more evident that the reign of the solar lease and PPA is diminishing in light of the transition into solar loans by nearly all of the major PV industry lease players.
In my opinion loans with 30% balloon payments and 2.9% annual payments escalators that are being offered by solar leasing companies will not be popular when compared to well established $0 down solar loans that do not have these requirements.