Why SolarCity (SCTY) Stock Is Down Today

NEW YORK (TheStreet) -- Shares in SolarCity Corp. (SCTY) are down -3.83% to $55.31 on Thursday after a Pennsylvania law firm announced it is investigating the company over potential claims concerning violations of federal securities laws.

The investigation is focusing on statements issued by the solar energy company between March 6, 2013 and March 18, 2014 concerning the company's financial performance.

The investigation will look into allegations that during the foregoing period the company was under pressure from investors to demonstrate the strength of its solar energy operations.

Pressure from investors resulted in the company failing to properly allocate expenses between the company's Solar Energy Systems Sales and its smaller Operating Leases segment, in order to hide the sales segment's ballooning expenses.

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TheStreet Ratings team rates SOLARCITY CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOLARCITY CORP (SCTY) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, poor profit margins, generally high debt management risk and feeble growth in its earnings per share."

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