Skip to footer

SolarCity IPO: How it beat the solar curse

SolarCity defied a trend of failing solar IPOs Thursday when its share prices soared nearly 50 percent on its first day of trading. What's behind the succes of the SolarCity IPO?

|
Mark Von Holden/AP Images for SolarCity
SolarCity Founder & COO Peter Rive and SolarCity Founder & CEO Lyndon Rive celebrate the company’s IPO at Nasdaq Thursday. The successful SolarCity IPO may indicate a proclivity towards investment in solar system installers over manufacturers.
  • By David J. Unger Correspondent

A day after lowering expectations by cutting the price of its shares, SolarCity Corp. saw its initial public offering make a soaring Wall Street debut.

SolarCity's shares opened at $9.25 on Nasdaq, up 16 percent from its IPO price. By Thursday's close, it had gained $3.79 per share, a stunning rise of nearly 50 percent. 

What a difference a day makes.

The change of fortune is a sign investors may be warming to the "buy side" of the solar industry. As an installer, SolarCity does not compete with the proliferation of cheap Chinese panels arriving on US shores. It instead capitalizes on the flooded market.  

"SolarCity is on the correct side of solar energy transactions," wrote Dana Blankenhorn in Seeking Alpha Wednesday.  "The problems of panel producers are its advantages, because they reduce its cost of goods."

That equation also helps explain why other solar stocks – from companies primarily on the market's "sell side" – have fared poorly this year. In April, BrightSource Energy, a solar thermal start-up, cancelled its IPO amid a turbulent market. Shares of First Solar, Inc. are down nearly a quarter this year. SunPower Corp. stock is down 13 percent this year.

SolarCity further distinguishes itself with a unique solar-leasing program that minimizes or eliminates solar's upfront cost – a major barrier to entry for many businesses and residents.

The San Mateo, Calif.,-based company also benefits from its association with Elon Musk, SolarCity's chairman and a co-founder of Tesla Motors Inc. Mr. Musk garnered praise after transforming the unprofitable electric-car maker into an award-winning company whose value has more than doubled since it went public in 2010.

“He’s a throwback to when people were doing less incrementalist things,” Peter Thiel, a co-founder of PayPal, told Bloomberg Businessweek in the magazine's September profile of Musk. “The companies he’s started are executing against a vision measured not in years but in decades.” 

Friends describe Musk as Steve Jobs, John D. Rockefeller, and Howard Hughes rolled into one, according to the Businessweek profile.

With a history of bucking bearish cleantech trends, Musk may be a useful antidote to investor skepticism.

But that skepticism was out in force early this week. A tepid response to SolarCity's upcoming IPO caused the company to postpone the stock offering Tuesday. On Wednesday, the company announced it would reduce the share price to $8 from between $13 and $15, effectively cutting the value of the company almost in half.

Thursday's stunning stock rise provided some vindication for the company. It is within $1.50 a share of hitting the lower range of its expected IPO price.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to SolarCity IPO: How it beat the solar curse
Read this article in
https://www.csmonitor.com/Environment/Energy-Voices/2012/1213/SolarCity-IPO-How-it-beat-the-solar-curse
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe