After much hype, anticipation, and frustration, SolarCity’s Initial Public Offering (IPO) hit the Nasdaq Thursday, closing at $11.79/share, while raising $92 million on its first day. The price was 47% more than when it opened up in the morning at $8.00/share.
The solar installation company had originally planned to sell shares between $13-$15/share. However, ongoing concerns, including the downward trend in solar stocks and some accounting issues, have plagued the company’s IPO, according to Bloomberg Businessweek:
Even as demand for alternative energy rises, solar-company stocks have been hurt by oversupply of equipment and raw materials. That has depressed the World Solar Energy Index of company shares as much as 65 percent this year, extending the drop from its 2007 peak to 96 percent.
While SolarCity currently benefits from tax credits totaling as much as 30 percent of the cost of these systems, the company’s accounting method for valuing the equipment has recently come under scrutiny.
In July, SolarCity and competitors received subpoenas from the U.S. Treasury Department for documents related to grants the company received for building solar systems, filings show. SolarCity said collecting the documents could take six months to complete and that a decision from the department’s inspector general may take as long as a year after that.
Despite the concerns, company CEO Lydon Rive believes the company will have a net positive cash flow by the end of 2013, showing that SolarCity is committed for the long haul in it’s IPO quest.
“What matters is what the price is in four years, not what the price is today,” said Rive in a televised interview with Bloomberg Television.
Meanwhile, SolarCity Chairman Elon Musk echoed Rives sentiment, and noted that the company had debated long and hard about whether to stay private or go public with the IPO. Eventually, Musk and company took the words of institutional investors to heart, going with the IPO and letting investors get comfortable with SolarCity’s business model.
“Where we arrived at the $13 to $15 was based on valuing the business on fundamentals,” adding, “$13 to $15 is actually a deal — we actually think it’s worth more than that,” he said.
With 684 MW of solar energy installed in the third quarter in the US, and prices continuing to plummet, its only good news for a company like SolarCity, whose IPO may breathe some life into the cleantech market for investors.
Sources: Greentech Media / Bloomberg Businessweek
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