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SolarCity’s IPO Up and Running, Gurus Who Own Competing Companies Brought to Light
Posted by: Dianne Tordillo (IP Logged)
Date: December 13, 2012 05:20PM

Trading under the stock symbol SCTY as of this morning, “clean energy” provider SolarCity appears to be experiencing positive activity in the market so far, as its stock has surged nearly 30 percent over its $8-a-share initial public offering price. The company had delayed its IPO by a day because it struggled to decide on a price for its 11.5 million offered shares. Upon reaching a decision, SolarCity shares, which opened at $9.25, now trades at $11.84 — its highest for the day so far was $12.70.

With a market cap of around $600 million reported by CNN, SolarCity is a company that installs solar panels for its clients, spanning from 14 states, through 31 operations centers (solarcity.com). Its business model is set apart from other solar companies, being that it is the only company that finances its own services of installing rooftop solar systems in exchange for long-term monthly payments from its customers, without involving third parties. The company, whose chairman is Tesla Motors (TSLA)'s Elon Musk, also provides additional services including energy efficiency evaluations, electric vehicle charging services, energy monitoring software and battery storage solutions.

SolarCity is the second solar company to initiate a public offering this year. Competitor, Enphase Energy Inc. (ENPH), whose IPO was $6.00 per share, went public in April. Since then, Enphase has deflated down to $2.96 in trade price, and has diminished in market value by 57.18 percent year to date.

Critics speculate whether SolarCity will result in the same fate, regardless of the recent boom in the U.S. solar market. According to a report by the Solar Energy Industries Association, there has been a 44 percent increase in photo-voltaic solar panel installations in residences across the nation.

Several investing Gurus have also dabbled in solar stocks this year, including Jim Simons, who owns 3 million shares of Suntech Power Holdings (STP), Brian Rogers, who owns 1.5 million shares of First Solar Inc. (FSLR) and Manning & Napier Advisors who owns about 357,000 shares of Yingli Green Energy Holding Company Ltd. (YGE).

In Third Point LLC’s first quarter investor letter, the hedge fund, which was founded by Guru Daniel Loeb, commented on Enphase stating:

“EnPhase has grown rapidly and is the number one inverter vendor for solar installations in California and a close second for installations in all of North America. The company is expanding into Canada and Europe and reported revenues for 2011 were ~$150M. In the face of solar industry headwinds, EnPhase has consistently increased gross margins and revenues yearly. They are the only company shipping volumes of Micro‐Inverters and have been able to grow through share gains based on superior value offered to their customers. For these reasons, we continue to own EnPhase and see a bright future ahead.”

Solar module manufacturer, First Solar was actually dubbed the worst-performing stock in the S&P in 2011, after it fell 86 percent. However, Greenlight Capitals’s David Einhorn shorted the stock the same year, in which he came out ironically victorious, according to Greenlights’s 2011 Letter to Investors.

Suntech, First Solar and Enphase stocks are down at least 2 percent for this afternoon’s trading. Yingli Green Energy is up 1.36 percent, along with another solar module manufacturer, Trina Solar Ltd. (TSL), which is up 4.79 percent.

All of the mentioned competing companies have lost significant market value year-to-date: Suntech has fallen by 56 percent, First Solar has gone down 7 percent, Enphase has fallen 60 percent, Yingli has fallen 42 percent and Trina has fallen 41 percent.



Guru Discussed: Brian Rogers: Current Portfolio, Stock Picks
Daniel Loeb: Current Portfolio, Stock Picks
Stocks Discussed: SCTY, STP, FSLR, YGE, TSL,
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