SolarCity Corp (NASDAQ:SCTY) executives are selling shares by the thousands but are they jumping ship too soon? It was reported this week that CFO Tanguy Serra and CRO Hayden Barnard sold more than 5,000 shares combined. This comes as the stock has collapsed 57 percent year-to-date.
SolarCity Executives Scared of Further Losses?
There is no argument that 2016 hasn’t started off well for the solar energy firm. With changes made by state regulators and utilities, the solar panel company has seen its shares tumble. Elon Musk, the firm’s biggest shareholder, lost more than $700 million in one trading day.
It seems some executives are frightened of further losses, according to recent SEC filings.
CFO Tanguy Serra sold 2,898 shares of SolarCity stock Tuesday at an average price of $18.67 for a total of $54,105.66. He now owns 16,122 shares of the firm’s stock, which is worth more than $300,000.
CRO Hayden Barnard sold 3,570 shares of stock on the same day for a total of $66,651.90. Barnard now owns 128,248 shares of SolarCity stock, which is valued at close to $2.4 million.
They likely lost a lot of money in their shares. Over the last 12 months, the stock has collapsed from as high as $61 a share to as low as $17. This is a 65 percent decline.
If you believe any of the latest research reports from the big banks, the pain may continue throughout 2016. However, the firm is staying the course and is playing it long. Whether or not this pans out successfully remains to be seen.
SolarCity Benefitting From Tax Changes
Despite the plethora of bad news, some good news may be coming, at least when it comes to taxes.
It was discovered that the IRS updated a program that hands out major tax credits to solar firms like SolarCity for its rechargeable lithium batteries. As part of the 30 percent Investment Tax Credit (ITC), residential customers and solar energy firms can receive taxpayer cash for purchasing energy batteries for their solar arrays.
Reportedly, the ITC was set to expire before the New Year, but Washington quickly extended it at the very last moment. This means SolarCity and SunEdison Inc (NYSE:SUNE) can receive billions of dollars worth of tax credits.
This may have shown how vulnerable solar firms may be in the open market. In other words, without government aid or legislation favoring solar energy firms, they may see their earnings decline.
In Nevada, for instance, the government modified its solar metering rules that would see SolarCity and SunEdison noticed a huge dip in money from their energy panels. Executives caused quite the fuss with state regulators and public officials, and threatened to leave the state immediately.
“I contacted Governor Sandoval multiple times after the ruling because I am convinced that he and the PUC didn’t fully understand the consequences of this decision, not only on the thousands of local jobs distributed solar has created, but on the 17,000 Nevadans that installed solar with the state’s encouragement,” SolarCity CEO Lyndon Rive told reporters at a press conference.
Analysts are still concerned over the stock. Some point out to Musk’s failure at keeping his promises, while others allude to SolarCity’s intricate and costly technologies.