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Solar PV beatdown continues: SolarCity cancels IPO

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  • Solar PV beatdown continues: SolarCity cancels IPO

    You'd think with a worldwide glut of solar PV panels driving prices down, that an installer (and 3rd party leaser) of solar panels would be doing better. Shades of Webvan with their operating losses vs. revenues.

    Other notes: if SolarCity is losing $77.9M on $103.4M in revenues with ZIRP - how is this ever going to get better? The article also cheerfully notes that solar PV installs are up 44% - but then again if you're selling $1 for 75 cents, it is pretty easy to drive volume.

    SolarCity Corp. on Tuesday abruptly postponed its initial public stock offering hours before trading was expected to begin, the Reuters news service reported.

    The San Mateo company, chaired by Tesla Motors CEO Elon Musk, had been expected to price its shares at $13 to $15, raising up to $150 million. But institutional investors balked, according to Reuters. A SolarCity representative did not respond to calls for comment.

    The reported delay marked the second time this year that a major solar company has backed out of its IPO at the last minute. In April, BrightSource Energy of Oakland canceled its initial stock offering outright rather than delaying it.

    "I'm in shock," said Sheeraz Haji, CEO of the Cleantech Group research firm. "Their sales are doubling, and it looks like a terrific company. I really thought this was going to happen."

    The solar industry has been hammered in recent years by a worldwide glut of photovoltaic panels, which has slashed prices and bankrupted many manufacturers - most notably, Fremont's Solyndra.

    But SolarCity doesn't make solar panels. Instead, the company installs and leases solar systems to homeowners and businesses, a business growing at breakneck speed. The plunge in panel prices has helped SolarCity, not hurt it.

    Although the 6-year-old company has yet to turn a profit, sales during the first nine months of 2012 jumped 166 percent compared with the same period last year, reaching $103.4 million. Losses in the first nine months of 2012 grew 37 percent, to $77.9 million.

    The clean-tech industry has generated few IPOs and even fewer successful ones, with electric carmaker Tesla a notable exception. The industry's supporters had hoped SolarCity would reverse that trend.

    With sales covering 14 states, the company has quickly become one of the dominant players in solar leasing, along with competitor Sunrun, based in San Francisco. In a video shown to institutional investors, SolarCity CEO Lyndon Rive boasts of signing up a new customer every five minutes.

    But investors have been wary of solar stocks in general, a problem that dogged BrightSource's planned IPO.

    The Oakland company doesn't make solar panels either. Instead, BrightSource develops massive solar power plants that use mirrors to concentrate sunlight. No matter. In an interview after canceling the IPO, BrightSource CEO John Woolard said that many institutional investors felt burned by solar and had grown leery of the industry.

    SolarCity's apparent delay suggests that investors still don't have an appetite for solar stocks - even from parts of the industry that are growing. The amount of photovoltaic solar power installed nationwide in the third quarter of 2012 grew 44 percent compared with the same period last year, according to a study released Tuesday by GTM Research and the Solar Energy Industries Association.

    "One thing I think the detractors overlook is that the solar market is actually expanding instead of contracting - it's just the manufacturers who are hurting," said Ron Pernick, managing director of the Clean Edge Inc. market research firm, speaking before SolarCity delayed its IPO. "Will the market be able to differentiate here? I don't know."