Market Overview

SolarCity Shares Up 20% As Rumors Of Musk Buyout Circulate

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SolarCity Shares Up 20% As Rumors Of Musk Buyout Circulate

Following unconfirmed market chatter that Tesla Motors Inc (NASDAQ: TSLA)'s Elon Musk will acquire SolarCity Corp (NASDAQ: SCTY), the latter's stock has risen 20 percent on the day.

According to a Seeking Alpha release shortly after 1:45 p.m. EST, the possible move to take SolarCity private has "apparently sent the solar installer/electricity provider's shares flying higher. 6.6 million shares have been traded thus far, topping a 3-month average of 5.3 million."

In addition to the whispers, other factors may be at play, boosting SolarCity on the day. Seeking Alpha highlighted two such catalysts:

  • 1. Shorts: 24.2 million shares of SolarCity have been shorted as of February 12, coming in at 40 percent of the float. These shorts are likely to result in large profits, particularly due to SolarCity's recent plunge over the last three months; since December 4, 2015, the stock has dropped more than 35 percent.
  • 2. Elon Musk's Interest Has Increased: Not only is Musk a chairman of SolarCity, but he recently increased his stake in the company to 22.6 percent.

Related Link: Tesla Short Sellers Paying Much Higher To Bet Against Company

Seeking Alpha said, "The Tesla/SpaceX CEO hasn't given any public indication he wants to fully acquire SolarCity, which sports a $2.3 billion market cap and could require a buyout price in the ~$3 billion range."

Numbers On The Move

Looking back at previous jumps in SolarCity's stock, it is probable that the Musk rumor mill has greatly influence the stock on Thursday, and is likely to do so in the future.

Following Musk's stake increase in February, SolarCity jumped over 23.46 percent to $22.60.

At time of writing, SolarCity was up more than 20 percent, trading at $23.44.

Image credit: Heisenberg Media, Flickr

 

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