This is according to Business Insider who are covering the recent announcement that Tesla has made an offer to acquire SolarCity, another Musk-owned business now in financial difficulty.
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“The “why now” could be because Elon thinks shares are undervalued”, he said. Elon Musk commented that it will make more sense after the second part of the Model 3 unveiling, which will happen closer to production in late 2017.
Trina Solar (NYSE:TSL) and Canadian Solar (NASDAQ:CSIQ) are two of the companies that could lose the most as SolarCity transitions to its own solar panels.
Undoubtedly, the deal would make Tesla a vertically integrated clean energy powerhouse that would have a dominant share in the residential solar market and a major share in the battery storage and electric vehicle markets as well. Jonas lowered his price target on Tesla stock to 245 from 333. And that’s all before the basic question of merging an automaker with an installer of solar panels. When Tesla’s board voted on June 20 to move forward with the offer, it used different advisers than it did on May 19, when it sold US$1.4 billion in new stock.
“We are skeptical of the benefits”, said Barclays in its research report.
A combination platter of electric vehicles, rooftop solar, and battery storage might be an attractive one for consumers looking to green solutions in the future.
We are skeptical of the benefits. SolarCity stock rose 3.3 per cent on Wednesday to US$21.88, far below Tesla’s proposed range of US$26.50 to US$28.50 a share.
Shares in Tesla dropped 9% on the announcement while SolarCity shares surged.
Tesla launched Tesla Energy in March 2015 to provide renewable energy batteries to homeowners, business owners, and utilities. Tesla’s own promotional pictures never featured the interior.
“It is even more clear that Tesla will need additional cash raises” to continue its expansion of electric auto and battery production, Mr Johnson said. The state of DE, where a majority of USA companies are incorporated, technically requires only that either the disinterested directors or disinterested shareholders approve the deal, but the standard practice is to do both.
Indeed, one of the actions Tesla took on Tuesday was to amend its bylaws to require all shareholder litigation to be filed in Delaware.
We would be able to expand our addressable market further than either company could do separately.
From the outside this looks like an abuse of power, and thus the merger between Tesla and SolarCity is not being received well at all. Since its 2010 initial public offering priced at $17 a share, the stock has risen more than 900%.
The company had net losses in each quarter since its inception-except for the first quarter of 2013.
As Tesla expands its global reach, SolarCity could benefit from expansion of retail stores, or speed up its solar-plus-storage offerings in markets like Australia or Germany.
Tesla Motors (TSLA) is back to stealing headlines this week.
Of seven directors of Tesla and eight directors of SolarCity, only one of each isn’t referred to above. Both companies are burning cash.
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Over the last 52 weeks Tesla Motors Inc’s stock price has decreased by -15.47% from 259.79 to 219.61. Morgan Stanley opines that the purchase of SolarCity wouldn’t help Tesla make better, high quality cars.
