Tesla will be reporting its fourth-quarter results by next week, and it is going to be a unique event for at least one sole reason: it is going to be the company's first report since buying the solar panel installer company SolarCity for $2 billion. Since then, Tesla has dropped the word Motors from its official company name, emphasizing that it's not going to be just about cars anymore.
Will SolarCity Affect Tesla's Growth?
But some analysts are not easily convinced that Tesla's expanding focus is good for the company. In fact, SolarCity could even weigh on results at a time when the company needs to focus on launching its Model 3 vehicle very soon.
SolarCity is the largest installer of residential solar systems in the United States, but according to Barron's Next, the company is going to face "declining sales growth" and "challenging economics" as it approaches the end of an important tax credit in 2022. Most analysts are continuing to believe that SolarCity is an unnecessary distraction during a very challenging launch period for Tesla.
Problems For SolarCity
SolarCity has posted a loss in its most recent quarter, and most analysts think that the company is losing market shares in its residential solar panels. It has also planned to manufacture solar panels starting this year, even as prices for the panels continue to falter.
Doubts Clouding SolarCity
According to The Street, SolarCity is projected to lose $270 million in 2017, which will drag down Tesla's results. The price target for Tesla is $160, versus its $268.95 closing price on Thursday. Summing it all up to one picture, Tesla bought solar panel installer SolarCity just last year, yet a lot of analysts thinks that the acquisition could be a potential distraction from the company's core business.
For now, all we have is speculations. We will have to wait and see if the SolarCity acquisition by Tesla pays off in the end, or will falter, along with Tesla's success.
