This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SolarCity Acquisition to Spark Industry Consolidation, Growth:

NEW YORK (TheStreet) -- The solar industry is getting smaller, and that's just what it needs to grow, say investors.

SolarCity (SCTY - Get Report) announced plans this week to acquire solar panel manufacturer Silevo for about $200 million with earn-outs of an additional $150 million based on volume and cost targets. The news comes just two weeks after First Solar (FSLR) announced it would acquire Skytron-Energy, a subsidiary of AEG power that provides utility-scale photovoltaic management systems.

$SCTY SolarCity Bets on Huge Solar Demand Growth With Acquisition of Silevo

? JLL IV (@TXplunger) Jun. 17 at 10:24 AM

Until now, SolarCity had only dealt in the installation of partner solar panels. The move will cut out the middleman for the solar panel installer founded by Tesla CEO Elon Musk and cousins Peter Rive and Lyndon Rive. And it could spark further consolidation in the industry.

In a blog post, SolarCity's founders said that they plan to build a manufacturing plant in upstate New York capable of producing more than a gigawatt of energy within the next two years. They also said that they may acquire more solar panel manufacturers in the future. "Our intent is to combine what we believe is fundamentally the best photovoltaic technology with massive economies of scale to achieve a breakthrough in the cost of solar power," they wrote. "Although no other acquisitions are currently being contemplated, SolarCity may acquire additional photovoltaics companies as needed to ensure clear technology leadership and we plan to grow internal engineering significantly."

SolarCity shares have increased more than 17.5% since the acquisition was announced.

$SCTY 60, no doubt about on Silevo acquisition, street loves this integration, $SPY was helping all the wqay

? michael dell (@ronin245) Jun. 17 at 10:17 AM

Though the stock has climbed, some investors said SolarCity trades at such high multiples that growth from consolidation is already priced in. The company trades at 30x trailing twelve month sales and is not yet profitable. It posted a $67 million loss in the first quarter of this year.

$SCTY At the low end of guidance sales only growing sequentially ~ 5%, Investors paying huge multiples for slowing growth, 56xEV/S 40x+ BV

? CDM Capital (@CDMCapital) Mar. 18 at 04:37 PM

Other solar panel makers have risen in the past two days on the belief that SolarCity may make residential solar power more mainstream, increasing demands for panels on homes or utility companies that provide green power solutions. FirstSolar, which provides utility scale solar plants, rose more than 1% Wednesday.

$YGE $SCTY bought pv maker "Silevo" and plan to buy more pv makers. Solar big in the news today!!

? Sean (@OptionSpot) Jun. 17 at 11:05 AM

Some investors said that they weren't betting on solar across the board. But they would bet on any company that involved entrepreneur Elon Musk, a founder of PayPal, Tesla, SpaceX and SolarCity.

$SCTY On Bloomberg TV. Elon Musk is involved in the plan for SCTY to buy a Solar Company. Never bet against Elon..

? Duke2Duke (@duke2duke) Jun. 18 at 12:16 PM

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SCTY $30.32 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs