Why SolarCity's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of solar installer SolarCity (NASDAQ: SCTY  ) are up 17% today after announcing another financing deal.

So what: Direct Energy and SolarCity have created a dedicated investment fund that will offer up to $124 million to build solar projects. Direct Energy will contribute up to $50 million to the fund, which will service commercial and industrial customers.  

Now what: To put this move into perspective, SolarCity's market cap is up about $400 million after announcing $124 million in financing. The fund is really business as usual for SolarCity, who didn't raise guidance so there won't be an impact to operations this year. I like SolarCity as a company but have a hard time seeing the stock as a value today, especially with crazy pops on financing that will generate about $25 million in earnings. That's why I'm not a buyer today.

Interested in more info on SolarCity? Add it to your watchlist by clicking here.


Read/Post Comments (4) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 10, 2013, at 3:19 PM, Eaglepardie wrote:

    take the 25 million in earnings and multiply that by the potential numbers of other utilitiy companies...this pop today is only the beginning!

  • Report this Comment On September 10, 2013, at 4:17 PM, ronwiserinvestor wrote:

    What will happen to companies like SolarCity now that California's AB327 has been approved by the senate ? Not good news for the California solar market which the leasing companies heavily depend upon.

  • Report this Comment On September 10, 2013, at 5:26 PM, plange01 wrote:

    you can bet this writer wishes he bought solar city yesterday! solar city is one of the hottest stocks around along with tesla both started by elan musk who many consider to be a modern day edison..look for scty to break $60 and tsla $200 by the end of this year..and of course i own solar city!

  • Report this Comment On September 10, 2013, at 7:29 PM, sonofTesla wrote:

    Travis, Fool is right...at least you admit you "like Solar City as a company"...I've made a killing going opposite of your advice thus far.

    And Plange01: ELON MUSK named his car company what he did for a reason. Please do not compare him to Edison...it's both inaccurate and insulting to both Mr. Musk and Nikola Tesla.

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