This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

SolarCity Corp Accounting Error Leads To Restating Of 2012 Results

Stocks in this article: SCTY TSLA

SolarCity delaying earnings again

Major solar power player SolarCity Corp (SCTY - Get Report) announced today that it was delaying releasing its 4Q 2013 earnings and will restate both 2012 and 2013 financial results following the discovery of an accounting error in connection with the way it calculates overhead expenses.



SolarCity Corp (SCTY - Get Report) shares are trading down on the news. The stock price is off $1.59 at $83.57 as of 1:24 PM ET

Error in calculating overhead costs

The company estimates that fixing the issue will increase solar-system sales cost by $16 million to $20 million for the nine months ended Sept. 30 and by $20-23 million for 2012. However, total overhead costs for the periods involved won't change, and the company plans to file revised, complete reports by March 18th at the latest. This is actually the second delay in filing last quarter’s earnings, as 4Q earnings were originally scheduled to be released on February 24th.

SolarCity an investor’s darling

SolarCity Corp (SCTY - Get Report) stock has been on a huge run over the last year. The price has jumped from just $16.50 in early March of 2013 to over $82 today. That represents an over 450% annual return. The stock has, along with Apple Inc. (AAPL) and Tesla Motors Inc (TSLA - Get Report), become one of the darlings of Wall Street, and has seemed bullet-proof even during market pullbacks.

Some analysts question future earnings projections

Some analysts, such as Lakewood Capital, however, are questioning both SolarCity Corp (SCTY - Get Report)’s business model and the company’s and consensus analyst revenue projections. Lakewood calls SolarCity "a competitive, low return finance business" and argues that revenues are inherently limited given potential customers can just buy solar panels themselves or finance them through their mortgage.

Lakewood also points out that consensus estimates on SolarCity Corp (SCTY - Get Report)’s projected earnings to do not include taxes and assume that all of SCTY’s customers will pay off their entire 30-year “solar mortgage”. Both of these assumptions are highly unrealistic and result in highly inflated earnings projections. Assuming the most optimistic outlook for the company, Lakewood believes the share price of SolarCity Corp (SCTY - Get Report) should trade under $10.

The post SolarCity Corp Accounting Error Leads To Restating Of 2012 Results appeared first on ValueWalk.

-By Clayton Browne

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs