Greenberg: SolarCity Signaling Slowdown with Groupon Deal
This originally ran today on Herb Greenberg's Reality Check.
SAN DIEGO (TheStreet) -- Here is a given in business: When companies start giving discounts and coupons, it's not out of strength.
From the press release:
Groupon (GRPN) will work with SolarCity (SCTY), the nation's largest solar power provider, to offer deals on solar systems in the Groupon marketplace. SolarCity makes it possible for many homeowners to pay less for solar electricity than they pay for utility power. For a limited time, customers can benefit from additional savings with a deal from Groupon by paying $1 for $400 off home solar power.
Groupon has more than 200,000 active deals and more than 51 million active customers globally. The SolarCity offer is Groupon's first national deal in the solar category and is part of their growing collection of home and auto services deals.
After purchasing today's solar deal on Groupon, homeowners will be contacted by SolarCity to schedule a consultation. If the homeowner decides to move forward with solar service, the discount will be applied. Homeowners can install their solar system at no additional cost and pay only for the power. SolarCity currently serves thousands of communities and major metropolitan areas in 15 states.
This comes on the heels of first quarter earnings that, to say the least, missed on residential megawatt deployments and offered lower-than-expected second quarter deployment guidance -- only to make up for it with better-than-expected 2014 deployment guidance while also giving huge guidance for next year.
As I wrote on Reality Check, where SolarCity has been yellow flagged, providing 2015 guidance was at least six months premature and suggests the company was throwing a Hail-Mary pass to divert attention away from an apparent slowdown.
From that report:
As good as the guidance was, given the unusually early timing it smacks to me no different than a retailer, out of the blue, boosting the number of stores it thinks it can open at some point in the distant future -- or a company announcing a big contract along with mediocre results.
Reality: You don't coupon when business is booming. You don't Groupon when you can merely coupon. Groupon. Coupon. Doesn't matter. Downgraded to a red flag, it goes.-- Written by Herb Greenberg in San Diego