Morning Commentary: SolarCity convertibles drop outright, on swap after disappointing guidance

By Rebecca Melvin

New York, Feb. 10 – SolarCity Corp.’s convertibles dropped on an outright basis and on swap in the early going on Wednesday as the underlying equity fell 25.5% after the San Mateo, Calif.-based solar panel company guided for a bigger-than-expected loss for its current quarter.

The company reported better-than-expected results for the just-concluded quarter, however.

Both SolarCity convertible bonds contracted several points in very active trade, a New York-based trader said.

SolarCity’s newer 1.625% convertibles were quoted at 52 bid, 54 offered.

SolarCity’s older 2.75% convertibles fell to the mid 60s.

SolarCity’s shares were last down $6.73, or 25.5%, at $19.62.

The company’s residential installations have been strong, but commercial installations have been weaker than expected.

For the period ended Dec. 31, SolarCity reported a profit of $4.63 million, compared to a loss of $3.6 million for the year-earlier period.

Excluding one-time items, the company lost $2.37 per share. Analysts had forecast a loss of $2.59 per share.

Revenue gained 61% to $115.5 million, which was better than the $105.6 million of revenue that analysts had expected.

For the current quarter, SolarCity said it expects a loss of $2.55 a share to $2.65 a shares, which is greater than the $2.36 a share that analysts had forecasted.

Elsewhere, SanDisk Corp. and LinkedIn Corp. were trading about flat on a hedged basis, a trader said.

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