Why Opower Inc's Shares Jumped 31% Today

A buyout from Oracle has this energy technology stock popping today.

Travis Hoium
Travis Hoium
May 2, 2016 at 11:15AM
Energy, Materials, and Utilities

Image source: Opower.

What: Shares of energy data company Opower Inc (UNKNOWN:OPWR.DL) jumped 31% on Monday after tech giant Oracle (NYSE:ORCL) agreed to buy the company.

So what: Oracle will pay $10.30 per share, or a total of $532 million, for Opower as a way to buy into the growing energy market. The company says it is now the "largest provider of mission-critical cloud services to utilities." That may be a great spot to be in as distributed generation resources and smart metering become more important to utilities, but it could also be a while before Oracle starts making money off this investment given the $44.9 million loss Opower reported last year. 

Now what: Opower's shares are now trading higher than the offer price, which usually means investors think the bid could go higher. But in this case I don't see Oracle needing to pay more than its current offer for Opower. It's probably time for investors to cash in their chips and feel fortunate that this company will find a long-term home in Oracle's growing energy business.