SolarCity Corp (SCTY) Surge Fizzles Out After Latest Debt Offering


The  jolt SolarCity Corp (NASDAQ:SCTY)’s stock received in early trading yesterday has shorted out in short order, with the stock dropping over $5.00 at one point in early trading today from its Wednesday high, before closing at $61.96, down 1.71% for the day. The Street, which rates SolarCity Corp (NASDAQ:SCTY) a sell, questioned how the stock would react today after it made huge gains in early trading yesterday following their fourth debt offering of the year.

SolarCity Corp (2)

The $500 million debt offering , in convertible senior notes, will have an annual interest rate of 1.625%, and will expire in 2019. SolarCity Corp (NASDAQ:SCTY)’s net proceeds are expected to be $488 million when they settle on September 30. Back in July, they raised another $201.5 million through a combination of senior and junior notes. They have also sold bonds twice since last November, totalling $124.7 million.

SolarCity Corp (NASDAQ:SCTY), which is backed by Elon Musk, will be getting a sort of Gigafactory of their own, similar to that CEO’s electric automaker, Tesla Motors Inc (NASDAQ:TSLA). The recently announced plans call for them to build a massive solar-panel factory in upstate New York, with that state providing 75% of the funding for the $1 billion project. It’s expected some of the proceeds from the debt offering will go to fund SolarCity Corp (NASDAQ:SCTY)’s 25% commitment in the project, which could be completed as soon as 2016.

SolarCity Corp (NASDAQ:SCTY) is set to see their federal tax incentives greatly decrease when that 2016 date rolls around, from 30% to just 10%, and the factory should help offset that transition. They are also on the hook for $100 million in debt next year.

Daniel Benton’s Andor Capital Management, in its second incarnation after closing its doors in 2008 during the financial crisis, is a major investor in tech stocks and a big investor in SolarCity Corp (NASDAQ:SCTY), with 1.5 million shares as of their June 30, 13F filing.

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