SolarCity Corp, the solar power provider led by billionaire Elon Musk, jumped 47 percent after raising less than first sought in an initial public offering (IPO).
The shares rose to US$11.79 at the close in New York. San Mateo, California-based SolarCity and shareholders on Thursday raised US$92 million in the offering, selling 11.5 million shares for US$8 apiece after earlier seeking as much as US$151 million, according to regulatory filings and a statement.
The company, which builds solar systems on customers’ rooftops and sells them the electricity, reported a US$95 million net loss in the 12 months through September. CEO Lyndon Rive said the business model requires significant upfront investment and will become cash flow positive by the end of next year as new customers generate enough revenue to cover the costs of buying and installing panels.
“We are installers, yes, but that’s just a part of our business,” Rive, 35, said in an interview yesterday. “What we really do is provide clean electricity at a lower price than your utility.”
SolarCity typically sells electricity for 10 percent to 15 percent less than customers pay utilities.
At the offering price, SolarCity was valued at about US$585 million, or about 4.7 times sales in the past 12 months, compared with multiples of less than 1 for publicly traded peers. The shares sold in the IPO represent a 16 percent stake in SolarCity, and chairman Musk bought US$15 million of the offering, according to a regulatory filing.
The IPO raised 39 percent less than originally sought after the company increased the number of shares offered from 10.1 million and decreased the price from a range of US$13 to US$15. SolarCity’s investors extracted a lower price even as the company is poised for growth after completing the most equipment installations in California, the US’ biggest solar-power market.
While demand for alternative energy rises, solar-company stocks have declined because of oversupply of equipment and raw materials.