California Net Metering Plan Potentially 'VERY Bad' For SolarCity, Axiom's Gordon Johnson Warns

During Thursday's trading session, shares of SolarCity Corp (NASDAQ: SCTY) have continued to rebound from recent lows set under the $28 level on Wednesday.

After plunging nearly 50 percent to start off 2016, the stock caught a near-term bottom at around 11 a.m. EST on Wednesday. Since then, shares have rallied more about 25 percent and last traded at $35.41.

The bullish price action comes amid some concerning commentary from a notable solar analyst, Axiom Capital's Gordon Johnson, related to a utility proposal for net metering in the state of California.

As Johnson sourced in a mid-morning alert to investors, PV Magazine on Wednesday reported "Advocates say that regulators may be considering an alternative proposal for the successor program to net metering..."

The article suggested, "Earlier this month the California solar industry appeared to be in a good position, with CPUC issuing a Proposed Decision in mid-December that retained the basic features of retail-rate net metering and rejected most of the mechanisms proposed by utilities to weaken compensation levels for customer-sited PV. However, solar advocates have expressed great alarm at a turn of events over the last few days."

Johnson's Take: Could Be 'VERY Bad' For SolarCity

Johnson noted, "California is the biggest solar market, so the state's decision on net metering is by far the most significant." If approved, Johnson is concerned the decision may be "VERY bad" for SolarCity.

The Axiom analyst maintains a Sell rating on shares of SolarCity.

Related Link: Axiom's Gordon Johnson 'More Cautious' On Sunedison's Ability To Make It Through 2016

To see all of Gordon Johnson's calls on the solar sector, including recent comments on SunEdison which contributed to the stock selling off some 30 percent in a single session, go to Benzinga's entity page for Axiom Capital.