Elon Musk Can't Be Happy Today

Elon Musk isn't used to not winning.

He was the founder of PayPal, the online financial payment platform that squashed dot-com and banking giants that wanted in on the action. PayPal is now eBay's (NASDAQ: EBAY  ) fastest growing subsidiary.

Musk then went on to usher in the modern era of electric cars with the high-end Tesla Roadster. Tesla Motors (NASDAQ: TSLA  ) hasn't sold a lot of cars, but it's been a hit with investors. Tesla shares have more than doubled since going public at $17 two years ago.

Now he's championing another green energy cause with today's publicly traded debut of SolarCity (Nasdaq: SCTY).

SolarCity was initially set to go public between $13 and $15, but ultimately had to settle for a sobering price of $8. It did bump the number of shares being offered to 11.5 million, but that's not much of a consolation prize.

The stock opened at $9.25 and quickly moved above $10. The pop may be welcome, but it's a far cry from what Musk -- SolarCity's chairman -- and his cronies were originally hoping to see.

SolarCity gives homeowners and businesses a cost-effective way to go solar. SolarCity is a one-stop shop, offering everything from the initial permitting and installation to the ongoing maintenance. The company's claim that solar energy is cheaper than oil or gas is valid, but the upfront cost of solar panels has always been the rub. There are government subsidies and tax credits that encourage going solar, but those incentives may very well be on the way out in the coming years as austerity measures kick in. SolarCity spreads out the initial costs over time for customers by financing the installations, and the drop in solar panel prices -- something that has slammed the leading solar energy stocks -- actually works to SolarCity's advantage by making its service more cost-effective.

Solar itself has been out of favor for some time, but sentiment is starting to bounce back. Susquehanna boosted its price target on industry bellwether First Solar (NASDAQ: FSLR  ) this week, even though the shares have nearly tripled since bottoming out in June.

SolarCity's growing in popularity. Revenue soared 139% last year, and it has more than doubled through the first nine months of 2012. The challenge here has been profitability, or in SolarCity's case the lack of it. The company has been posting net losses that have been increasing every year.

However, Musk's name -- and SolarCity's marketing approach to spread payments out over 20 years -- will make SolarCity one of the more magnetic names in solar.

Sooner or later, though, profitability is going to have to show up to brighten the stock's otherwise sunny fundamentals.

One solar stock shining brighter than the others is First Solar. Investors and bystanders alike have been shocked by First Solar's precipitous drop over the last 12 months, and now the stakes have never been higher for the company. Are they done for good, or ready for a rebound? If you're looking for our recommendation on how to play First Solar along with continuing updates and guidance on the company whenever news breaks, we've created a brand new report that details every must know side of this stock. To get started, just click here now.


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  • Report this Comment On December 13, 2012, at 4:05 PM, Decoy0527 wrote:

    I wish Elon Musk well in both Solar City and Tesla, but I think he is a bit too confident of his own abilities since the PayPay success. Trying to make money in cutting (bleeding) edge car manufacturing and solar panel installations is sure going against the grain. As I said, good luck to Elon, but I'm not investing a nickel in either company. Very high risk, with moderate reward.

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