At the end of the first day of trading on the NASDAQ for solar services company SolarCity, its share price was almost 50% up from its opening price. It closed the day at $11.79 per share, which was nearly $4 higher than it’s initial price of $8.
The cleantech company had earlier planned to sell just over 10 million shares at between $13-$15 a share, but lowered the price before the offering. This lowering of the initial price now seems like a good move, given the large jump on the first day of trading, even though it finished lower than initial estimates. The company raised $92 million in the IPO, and had a valuation of $592 million at $8 per share.
In a Bloomberg video interview on the day of the IPO, SolarCity CEO Lyndon Rive said about the the share price, “What matters is what the price is in four years, not what the price is today.” About the initial pricing of $13-$15, SolarCity Chair Elon Musk (who is also a founder of Tesla Motors and SpaceX) said, “$13-$15 is actually a deal. We actually think it’s worth more than that.” Rive also said that their aim is for the company to be cash-flow positive by the end of 2013. SolarCity investors agreed to buy around one third of the available shares in the IPO.
It’ll be very interesting to see what the share price does in coming months. Prices for solar manufacturing stocks have not been great this year, but SolarCity is not a solar manufacturing company. Instead, the company focuses on providing solar power system design, financing, installation, energy efficiency and monitoring services; Therefore, it is shielded somewhat from having to make a profit from the very competitive business of making low cost solar panels. In addition, solar installs are currently setting records in the United States, and the price of solar panels is continuing to drop.
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