Famed short-seller Jim Chanos is betting against SolarCity, the solar power company cofounded by Elon Musk.
The founder of Kynikos Associates revealed on CNBC’s “Halftime Report” that he thinks that SolarCity’s business model is similar to that of a subprime financing company.
SolarCity installs solar panels on residential and commercial buildings. The company was founded by Peter and Lyndon Rive, and Elon Musk, their cousin, is chairman.
Musk helped conceive of the idea for the company, and is its biggest shareholder.
Here is what Chanos had to say about the company:
“And the residential model, I’d like to point out — SolarCity is really a subprime financing company in effect. You basically lease the panels from SolarCity. They put them on your house and they collect the lease payments. So in effect, if you put on the panels you have a second mortgage on your home because you hope it’s an asset, but in many cases it turns into a liability.”
The stock was trading down more than 9% on Friday.
We reached out to SolarCity for comment.
Here’s a chart of this week’s trading: