SolarCity: Sorry, No More

I finished a 54-page report on SolarCity, which will serve as a replacement to a series on this website. I apologize for promising a longer series and not delivering, but 54 pages is too much and I’ve tired myself out on writing about the business.

A short summary is they have grown at a 94% CAGR since 2012 and are lowering future growth, starting in 2016, to 40% annualized, to focus more on operating costs and being cash flow positive. It is not a result of lower demand, as they will likely be unable to fill all of it next year.

Today’s SolarCity has “earning power” (a very complex metric focused around NPV creation net of current operating expenses) of $222 million on a TTM basis. This places them at 15x earnings. This earnings metric will grow faster than their top line 40% expectation by a large margin and the business will earn nearly $2 billion in 2020, by my estimation. Applying a small multiple to that indicates a huge return on your investment in SolarCity through 2020, which I conservatively estimate at 8.5-11x your money. At that time, I still would not sell the stock, as it has many decades of growth ahead of it.

My full report is not available to general public. I am using it to get hired at an asset management company or to start my own research business.

But again, I’m sorry to not write more. I’m fatigued on this one.

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About Andrew Schneck

I am a value investor focused on misunderstood securities and industries, with an eye for long-term stock ownership.
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