Gundlach also chimed in on Tesla’s proposed acquisition of SolarCity Corp, which Tesla’s Chief Executive Officer Elon Musk called a “no-brainer”. We will get back to you as soon as we get any updates on the issue.
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Tesla believes its combination with SolarCity will result in significant benefit for its shareholders, in addition to making it the world’s only vertically integrated company to offer end-to-end renewable energy products.
Tesla on Tuesday offered to acquire SolarCity in an all-stock deal valued at up to $2.8 billion.
Some have quickly noted that the deal dilutes Tesla shareholders somewhere between 8 to 9 percent, and that the combined entity has negative free cash flow of 4.856 billion with $5.234 billion of debt.
The result, according to Musk: a soup-to-nuts provider of eco-friendly energy products that eventually could be worth a trillion dollars – a milestone yet to be achieved by any company in history.
Musk, who is the chairman of SolarCity and CEO of Tesla, is the largest shareholder of both companies owning 22 percent of the rooftop solar company and 21 percent of the electric vehicle producing firm.
There’s nothing new about auto companies partnering with solar companies to provide deals on solar systems for their companies.
Barclays analyst Brian Johnson commented that the proposed transaction has “little in the way of synergies (and) much in the way of cash burn”.
Mr Musk owns 22% of SolarCity and sits on the company’s board. Tesla fanatics will predictably swoon at the deal and praise Musk for his vision. When you add changing state legislation to solar power policy to the mix then you have a struggling company. With Tesla cars, its storage batteries and SolarCity’s sonal panels, consumers will be able to use electricity in the most sustainable and efficient manner, reducing dependence on the grid and lowering their costs.
He envisions a future where companies compete for durable, high-value, lifetime customers through a subscription model. “Maybe the feeling is that this takes away focus, and it could financially strain Tesla, which is going to continually need a lot of cash”.
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“Both companies are driven by a mission of sustainability, innovation, and overcoming any challenges that stand in the way of progress”, Tesla said in its blog post.
