This Day On The Street
Continue to site
ADVERTISEMENT
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

Why SolarCity Is Shining Once Again for Investors

The leasing model creates upfront costs for SolarCity in the short-term, but creates a reliable future income stream as the number of solar installations continues to increase. From the customer perspective there is no upfront cost of installation which facilitates a simple switch to solar.

The value proposition from SolarCity's perspective is it has a consistent, predictable stream of 20-year cash flows. The economics also improve from decreasing costs. This is why the cost of solar panels is a critical piece of the equation and a key reason why this acquisition is being so well received by the market.

Long-Term Assumptions

The company's recurring revenue model has been a source of accounting controversy, causing delayed earnings and accounting restatements. The company says backward measures are the wrong way to value the company and that investors should focus on the present value of the long-term lease contracts, a number it refers to as "retained value." At the end of 2013, SolarCity said this measure topped $1 billion. But these methods have earned the company its share of critics highlighted in a recent Wall Street Journal  "Heard on the Street" article questioning the company's valuation.

Best Stocks Now Analysis

I am a big fan of residential solar and have seen first-hand its rapid growth potential living here in sunny San Diego. SolarCity is a mid-cap name with a market capitalization of $5 billion.

Data from Best Stocks Now App

SolarCity's growth potential and valuation is hard to measure using conventional methods. Its growth is tied to solar installation growth which is rising at a rapid pace. Like Elon Musk's other companies, SolarCity is an industry innovator and disruptor.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG
SCTY $56.53 0.00%
TSLA $205.27 -0.74%
YHOO $44.66 0.46%
AAPL $127.60 0.00%
GOOG $535.38 0.00%

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs