SolarCity (SCTY) Up on Acquisition of Solar Panel Manufacturer

Shares of San Mateo, California based SolarCity Corp. (SCTY) rose sharply on an overall up day on Wall Street. SolarCity's stock was up 17.58%, rising $9.65 per share to close at $64.53, on volume of 24,105,997 shares. The company announced that it is acquiring a solar panel maker, that will be a "breakthrough in the cost of solar power". The company also announced that it is planning to build a solar power generating plant and solar panel manufacturing facility in New York as a result of the acquisition.

Founded in 2006, SolarCity Corp. is in the renewable energy services industry. It's the largest installer of residential solar panels in the US, leasing rooftop solar power systems. It installs ongoing monitoring and repair services of solar energy systems. It provides services to homeowners, businesses, schools, non-profit agencies and government organizations. SolarCity currently operates in 15 states and claims to sign a new customer "every three minutes". In 2013, the company had a net loss of $55.79 million, on revenues of $163.84 million. The company employs 4,312 people, and experienced sales growth of 27.3% in 2013. The company announced on Tuesday that it entered into an agreement to buy Silevo Inc., a Fremont, California, based manufacturer of photovoltaic (PV) solar panels. SolarCity is paying $350 million for Silevo. As a result of the acquisition, SolarCity will also be breaking ground on a PV panel manufacturing facility, an effort originated by Silevo. It is believed that the acquisition will make SolarCity the most integrated solar installer in the industry. Prior to the acquisition of Silevo, SolarCity has primarily been involved in solar panel installation. The company leases rooftop solar powered systems to customers, who pay little in upfront costs for the installation, then make lease payments on the equipment. The leases can last for up to 20 years. The acquisition of Silevo will enable SolarCity to also manufacture the solar panels that it leases to customers, giving it greater control of the entire process. One of the central issues with production of the panels is the control it will give SolarCity over the aesthetics - given that solar panels are readily visible from the outside of the home. Said SolarCity Chairman Elon Musk, the goal is "to make your roof look better, not worse, (to be) cool looking, aesthetically pleasing solar-panel installations on your roof...I think that's important for a lot of homeowners." The acquisition of Silevo will also enable SolarCity to lower installation costs by producing more efficient PV panels. As a result, the company plans to issue new cost reduction goals in the near future. Ultimately, the goal for SolarCity is to improve the technology so that unsubsidized solar power will be able to compete favorably with the traditional existing power grid. The New York solar power facility will initially be a pilot project, and it is expected to be operational within two years. With a capacity of at least one gigawatt, it will be one of the largest solar power plants in the world. Solar panel manufacturing and storage are expected to come online at a later date. Other News About SolarCity Corp. SolarCity: Rising Short Interest Makes Short Squeeze Possible Short interest in SolarCity is up for three straight updates and hit a new high. SolarCity, REC Group Ink Solar Panel Deal SolarCity will purchase a minimum of 100 megawatt (MW). Other Stocks in the News (BNNY) Annie's has witnessed a significant price decline in the past four weeks. What Is Carl Icahn Thinking In Taking An Interest In Family Dollar? Carl Icahn has taken a 9.4% interest in Family Dollar - Seeking Alpha asks why?

Published on Jun 18, 2014
By Kevin Mercadante

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