Shares of residential solar installer Vivint Solar (VSLR) fell as much as 22.1% in trading Friday after the announcement of a large share offering by a major shareholder. Shares bounced lower as the day went on and were trading at their low at 12:35 p.m. EST.
313 Acquisitions LLC, which is controlled by Blackstone and Vivint Solar's principal stockholder, is selling 8 million shares, with underwriters given the option to sell another 1.2 million shares. What was so shocking about the sale is that shares are being sold at $5.50 per share, a massive discount to yesterday's close of $7.00 per share.
Vivint Solar's shares had jumped this week, which is one reason the offering appears to be so far below market. But the discount is jarring nonetheless. What may be more concerning is a major shareholder starting to sell its stake in the business, indicating they don't see a very bright future in residential solar.
Vivint Solar isn't getting any funds from today's stock sale, and this won't affect the core business, so investors shouldn't change their investment thesis today. What's worth noting is a key shareholder selling the stock, which can sometimes be a sign that they don't see long-term value. In this case, I think Blackstone was an opportunistic buyer when Vivint was in a weakened position, and it is simply cashing out at a point of strength for the stock. For long-term investors, as long as the core business continues to do well, this sale won't change anything about the stock's long-term trajectory.