Elon Musk’s Decision to Buy SolarCity Draws Mixed Reactions | NBC Bay Area
East Bay

East Bay

The latest news from around the East Bay

Elon Musk’s Decision to Buy SolarCity Draws Mixed Reactions

    processing...

    NEWSLETTERS

    Call it the Icarus of stock deals ... this one may be flying too close to the sun. Elon Musk wants to buy SolarCity. Scott Budman reports. (Published Wednesday, June 22, 2016)

    Call it the Icarus of stock deals ... this one may be flying too close to the sun.

    Tesla wants to buy SolarCity.

    More than a Bay Area tech hookup, though, this one has Elon Musk written all over it — literally.

    Musk is the chief executive officer of Tesla, and the chairman of SolarCity. He is also the biggest shareholder of each.

    Which is one of the reasons many on Wall Street say stay away. Even as Musk himself called the deal a “no brainer,” one analyst on CNBC said, “Right, as in nobody with a brain cell should get into this.”

    Yes, there’s a conflict in Musk buying another Musk company.

    Besides that, there are far cheaper ways to get into the solar business. SolarCity, while slumping, is still a $2 billion company. That’s a lot to put panels on roofs, even if those panels may one day power your electric car.

    But there are supporters.

    Suvi Sharma, CEO of Fremont’s Solaria, says the biggest part of the deal is “to transfer Tesla into an energy company.”

    And there’s big money in that.

    For now, though, Wall Street has voted, and it’s ugly. A small gain in SolarCity (SCTY) shares, but a 10 percent slump in Tesla (TSLA) shares. Almost exactly as much shareholder value lost, as the entire market cap of SolarCity.

    Scott tracks tech on Twitter: @scottbudman

    Get the latest from NBC Bay Area anywhere, anytime
    • Download the App

      Available for IOS and Android