SolarCity shares up 200% since IPO

SolarCity shares jumped more than 24% on 13 May as it confirmed its expectation to become “consistently” cash flow positive by the end of the year.

Shares in SolarCity continue to confound analysts, having risen more than 200% since the California-based PV-leasing specialist went public in December.

However, some analysts warn that the recent valuation surge – up 36% in the past week – may be largely attributable to the strong results reported last week by electric car maker Tesla Motors – part of the so-called “Musk effect”.

South Africa impression Elon Musk is the co-founder and largest shareholder of both Tesla and SolarCity.

SolarCity chief executive Lyndon Rive – Musk’s first cousin – argues that typical financial reporting standards do not paint a clear picture of SolarCity’s progress, because its business model involves high upfront investment into PV systems before raking in steady profits over the course of several decades.

The company hauled in revenues of $30m during the first quarter – split roughly evenly between recurring revenue from operational solar leases and outright sales of PV systems.

SolarCity reported an operating loss of $21.8m during the first quarter of 2013 – worse than its $14.6m loss in first-quarter 2012.

However, the company says that once its PV hardware and installation costs are amortized over a 30-year period – the expected operating life of its systems – then it netted a gross profit of $12.7m during the quarter.

SolarCity puts at $1.22bn its “estimated nominal contracted payments remaining” – a complicated measure which essentially shows what it is owed by its solar-leasing customers over the lifetime of their PV systems.

Of that, it claims nearly $570m as “retained value”, which excludes the amount it expects it will have to pay out to fund investors and spend on things like insurance, repairs and inverter replacements.

SolarCity deployed 46MW of PV in the first quarter – up 12% year on year. It expects to deploy 250MW this year, compared to 157MW last year and 72MW in 2011.

SolarCity – whose business model thrives on ever-cheaper PV modules – reports operational expenditures of $0.74/W so far in 2013, down from $1.02/W in 2011.

After the recent surge in its share price, SolarCity is valued at nearly $2.7bn. By comparison, China’s Yingli, the world’s largest supplier of PV modules, is valued at less than $400m.