SolarCity Corp. (SCTY:US), the solar power provider led by billionaire Elon Musk, jumped 47 percent after raising less than first sought in an initial public offering.
The shares rose to $11.79 at the close in New York. San Mateo, California-based SolarCity and shareholders yesterday raised $92 million in the offering, selling 11.5 million shares for $8 apiece after earlier seeking as much as $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 $95 million net loss in the 12 months through September. Chief Executive Officer Lyndon Rive said the business model requires significant upfront investment and will become cash flow positive by the end of 2013 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 today in an interview. “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 $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 $15 million of the offering, according to a regulatory filing (SCTY:US).
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 $13 to $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 U.S.’s biggest solar-power market.
SolarCity, which booked a $95 million net loss in the 12 months through September, is one of a handful of companies that lease solar panels to customers, install them on their property, and charge them below-market rates for the electricity they generate.
While demand for alternative energy rises, solar-company stocks have declined because of oversupply of equipment and raw materials. That has sent the World Solar Energy Index of company shares down as much as 65 percent this year, extending the drop from its 2007 peak to 96 percent.
Real Goods Solar Inc. (RSOL:US), which SolarCity names as a competitor, yesterday traded at about 0.2 times last year’s sales, while solar-module maker First Solar Inc. (FSLR:US) traded at about 0.9 times, data compiled by Bloomberg show.
The stock is listed on the Nasdaq Stock Market under the symbol SCTY. Goldman Sachs Group Inc., Credit Suisse Group AG and Bank of America Corp. led SolarCity’s IPO.
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