SolarCity Receives $100 Million Investment, Shares Spike
Solar related stocks have been hard hit over the past few weeks, prompting investors to debate if the deflated valuations are attractive enough or if further downside is likely.
Hope Bolstered For Bulls
Bullish investors may have received a boost of confidence on Wednesday as Silver Lake's energy and resource innovation fund, Silver Lake Kraftwerk, announced a strategic investment of $113 million in aggregate principal amount of SolarCity's zero coupon convertible senior notes.
The fund will invest $100 million of its own capital, SolarCity's Chairman Elon Musk will invest $10 million and the company's CEO Lyndon Rive will invest $3 million.
SolarCity's stock has lost more than 50 percent of its value over the past year as the company's growth outlook failed to impress investors. However, Silver Lake Kraftwerk's Managing Director, Josh Raffaelli, said that SolarCity is a "highly attractive" long-term investment.
"We think the Company's unparalleled access to solar-specific tax equity, asset-backed security and debt clearly differentiates it from providers that are funding projects constantly via equity markets," Raffaelli said. "Furthermore, we firmly believe that SolarCity's near term focus on cost reduction and cash flow breakeven is absolutely the right strategy—the Company is already the leader in both commercial and residential solar."
Opportunity Ahead In Distributed Solar Generation
Raffaelli also noted that distributed solar generation is an "enormous opportunity" and that "there is no other company better positioned to take advantage of it."
Silver Lake Kraftwerk initially invested in SolarCity back in February 2012, when the company was still private. In fact, SolarCity was Silver Lake Kraftwerk's first investment, according to Green Tech Media.
SolarCity is currently trading up 2.2 percent at $26.58 at the time of this writing.
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