Monday, December 23, 2013

SolarCity's Bright Growth Prospects

Founded in 2006 with the initial objective of selling solar energy systems outright, SolarCity (SCTY-$55.60) has since embraced the concept of being in the “energy finance” business. Avoiding utility-scale solar projects dominated by the likes of a First Solar (FSLR), the company now aggregates small PV residential rooftop projects into large solar leasing portfolios that offer predictable, recurring revenue streams either through power purchase agreements (where customers – residential homeowners – pay a fee per kWh based on the amount of electricity the solar energy system actually produces) or by contracted lease agreements (fixed monthly fees).

Third-quarter 2103 gross margins speak to the profit potential afforded this “finance company’s” business model: gross profit of operating leases to retail customers (homeowners and small business owners) was $16.3 million, or 66% of lease revenue; the gross profit margin of PV energy systems sold was $1.1 million, or 5% of sales!

SolarCity is the U.S. leader in rooftop residential solar installations, with a market share of….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

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