SUN SCORES HIT ON WALL STREET

SolarCity's Stock Debut: Wall Street Success In A Struggling Market?

Jessica Lillian, 13 December 2012 (Solar Industry)

"Shares in…PV integrator SolarCity (NASDAC:SCTY) began trading on the NASDAQ Global Market this Thursday, following months of anticipation…[Marketer and installer] SolarCity has been heralded by some industry analysts and executives as the next great hope in a solar stock market dominated by acutely suffering module manufacturers…SolarCity priced its initial public offering (IPO) of 11.5 million shares of common stock at $8.00 per share…After opening at approximately $8.00 to $9.00, shares quickly began trading above $12 [and thin film PV manufacturer First Solar - whose stock price is carefully watched as a key indicator for the entire solar sector - saw its price rise]…

“…[But] an ongoing investigation [of SolarCity] by the U.S. Department of Treasury also still looms…In October, SolarCity admitted in its SEC documents that the company - along with other unnamed installers - is being probed by the Treasury's Inspector General for supplying possibly inaccurate fair-market values for its PV systems when applying for money under the Treasury's Section 1603 program.”

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“Although no one at SolarCity has been formally charged with any misconduct, income tax audits earlier this year revealed system valuation discrepancies. The probe - and similar questions within the industry regarding installers' system pricing practices - brings an additional element of uncertainty in an already skittish stock market.

“…[T]he downstream solar market is both attractive and active right now…Whether other integrators and system financiers follow in testing the IPO waters or take another option, such as a merger, the dominant players will likely begin to separate themselves from the pack as this segment matures…One key to differentiation…in SolarCity's model…[is] integrating the finance and operational sides of the business…[to] avoid some of the competitive risks…[of] a construction-only firm…”

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