Billionaire Elon Musk’s rooftop solar company SolarCity announced Wednesday it is only losing slightly money per share than it was last year despite increased revenues.
Musk’s company posed losses of almost $2.27 per share in the third quarter, which is only slightly less than the $2.41 per share losses it posted this time last year.
The company plans to merge with Tesla, Musk’s electric car company, which would effectively bail out Solar City. Musk, who is the chairman of both companies, owns 19 percent of Tesla and 22 percent of the beleaguered SolarCity. Musk’s cousins Lyndon and Peter Rive are senior SolarCity executives.
SolarCity previously offered to sell $95 million in short-term bonds to Musk’s rocket company, Space X, with a very high interest rate of up to 5.25 percent in June. Such a high interest rate and the short-term of the bonds indicates that the solar company needs cash fast. The purchase means SpaceX has a total of $330 million invested in the rooftop solar company.
SolarCity has been in rocky financial straits recently as states and the federal governments cut back on lucrative subsidies and tax credits supporting the kind of rooftop solar panel the company sells. This has caused the company’s stock to fall rapidly and currently hovers around $19.50 per share, down from its 2014 high of more than $86.
Banks and credit rating agencies have notice the company’s dire financial straights. JP Morgan downgraded projections about SolarCity’s stock in February due to unfavorable regulatory changes. Barclays also downgraded SolarCity’s stock the same month, lowering the price target from $49 to $20 per share.
SolarCity’s financial problems began late last year after Nevada utility regulators cut back how much energy companies were forced to pay solar panel owners for their energy along with increasing the monthly fee for having rooftop panels. The change caused Musk’s SolarCity stock to devalue by roughly $165 million in a single day and saw the company to follow through on its threat to end 550 jobs in Nevada.
Many states, including Nevada, had so-called net-metering policies which allow people or businesses with rooftop solar panels to sell power they produce back to the grid at retail electricity rates. SolarCity and other companies benefited from these policies, which encouraged solar power and expanded their market.
However, states are cutting back on net metering subsidies. Roughly 20 other states are considering changing their net-metering laws, which would dramatically alter the economics of rooftop solar, according to MIT Technology Review. Without net metering payments, rooftop solar “makes no financial sense for a consumer,” Musk cousnin Lyndon Rive, CEO of SolarCity, admitted to The New York Times.
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