Since we mentioned SCTY in my write-up of PSIX, let’s discuss it next. I’ve had a love-hate relationship with this company, not able to make up my mind. Not really love-hate, actually, more like love-puzzlement-and-hesitation.
I love the company because:
They are an Elon Musk company, and he is one smart and charismatic guy.
They are spreading solar power instead of polluting power.
They are growing like mad.
They benefit from falling solar panel prices, while other solar companies (who make panels) are killed.
They have a dominant position.
I am puzzled and hesitate about the company because:
It’s so hard to understand how their finances work and whether they are making money.
I wonder whether people will renew their contracts if the price of solar keeps falling, and whether SCTY will have to keep cutting their prices to keep up with the competition if this gets simpler and simpler and cheaper and cheaper. (i.e. becomes a commodity product).
I think maybe buying a company to make panels and building a factory for them was a big mistake as panels are outdated and near obsolete quickly, and the price is falling.
Utility companies are fighting back and starting to make it hard for solar owners to sell back electricity to the grid. They also convince state legislatures to essentially tax solar panel owners to help pay for the grid.
Thus I’ve been in and out of SCTY over the past couple of years, depending which of these sentiments has the upper hand. Most recently I got back in following a great series of three articles by Simon Erickson on MF RB explaining the business. I‘m keeping my position really small though at the present time, for the reasons above.