I Still Love You, SolarCity (NASDAQ: SCTY)

Drowning my SolarCity (NASDAQ:SCTY) Sorrows

Written by Brian Hicks
Posted November 6, 2014

mesctyThe good news is that my brother-in-law came through with some delicious Ethiopian coffee he roasted himself last month. A fresh cup of that, plus a giant bar of organic dark chocolate is soothing the pain of SolarCity's (NASDAQ: SCTY) rapidly deteriorating stock price this morning.

Revenues fell short, and Bloomberg correctly revealed an inconvenient truth followed up by a not-so-rosy picture …

Excluding a loss of $89.3 million that was attributed to non-controlling interests, the company lost 75 cents a share, beating the $1.11 average loss of 11 analysts’ estimates compiled by Bloomberg. Sales rose 20 percent to $58.3 million.

Quarterly losses attributable to non-controlling interests can cause significant swings in income. Analysts typically exclude those variations from their estimates. Today’s profit likely won’t be repeated soon, said Chief Financial Officer Brad Buss.

“I don’t expect that to continue,” Buss said today on a conference call. A higher share of the company’s losses during the quarter was allocated to these non-controlling interests, he said.

It is unlikely SCTY will be profitable anytime soon. But I guess I'm a glutton for punishment, because I still believe in the company. I'll take my lumps and sit tight. My loss at this point isn't big enough to sell for a tax loss, and quite frankly I don't want to bail on a company that's aggressively embarking on a long-term plan of massive growth. Sure, my timing could've been better, but they can't all be “quick doubles.”

All this being said, I am lowering my one-year price target to $70.

Of course, it's not all coffee, chocolate and tears this morning.

Tesla (NASDAQ: TSLA) delivered, thereby giving shorty a nice kick in the nuts today. That always gives me a good sinister giggle.

With strong Q3 earnings and an outlook that indicates a 50% annual growth for the “foreseeable future,” the market rewarded TSLA with a 6% bump this morning.

Also helping me turn my SolarCity frown upside down is Whole Foods Market (NASDAQ: WFM).

The stock so many toxic slop loyalists love to hate is up 10 percent this morning after getting a vote of confidence from Morgan Stanley analyst Vincent Sinisi. Sinisi echoed an argument I've long argued regarding competition, saying …

"While other retailers can sell nat/org products, the WFM experience remains unparalleled."

Damn right!

Whole Foods is currently trading at around $44 a share. My one-year price target remains at $52.

All in all, it's a pretty good day for Green Chip Stocks. The only downside is SCTY. This, unfortunately, is a heavy burden to bear as my expectations for this one have well exceeded the reality of what lies ahead for this solar superstar.

Such is life!