SolarCity Corporation (NASDAQ:SCTY)
SolarCity is having an incredible day in the market today, and for good reason. The company announced that it was able to raise a massive amount of money just before the merger with Tesla (NASDAQ:TSLA). Today, we'll talk about the fund raising news, the Tesla merger, what we're seeing from the stock, and what we can expect to see from SCTY ahead.
SCTY Raises $305 Million In A Difficult Deal
In a difficult deal, SolarCity has raised $305 million. In fact, it has been reported that coming to an agreement on this deal was more challenging than the merger with Tesla.
The money was raised through a second cash equity transaction. Under the transaction, a private investment fund, advised by Soros Fund Management, provided the equity investment through a list of residential, commercial, and industrial solar projects.
One of the factors that had investors so excited about the news was the way the transaction was done. SCTY placed the equity investor and lender group separately. As a result, the company was able to achieve a pre-tax, weighted-average cost of capital at 7.4%. This is incredible news, as it shows a significant improvement over the company's first cash equity transaction.
Don't Forget About The Merger News
The big news right now is the fund raising. However, the news is actually made bigger by the fact that this fund raising happened in the midst of a merger. Don't forget, last month, SCTY and TSLA made an agreement to merge. Under the agreement, Tesla will pay $2.6 billion to acquire the company. At the moment, we're waiting for the SEC review and shareholder vote, which is expected to come at some point after September 14th. So, there's a lot going on surrounding the stock at the moment, and it's getting more and more exciting with each day.
What We're Seeing From The Stock Today
It's clear that investors are excited about the cash equity transaction from the gains that we're seeing in SolarCity today. Currently (1:13), the stock is trading at $17.86 per share after a gain of $1.08 per share (6.47%) thus far today.
What We Can Expect To See Moving Forward
Moving forward, things are looking great for SCTY. First and foremost, the news today was overwhelmingly positive. With a very low cost on the transaction and the fact that it is happening just before the acquisition, this is incredibly exciting news.
All in all, SolarCity has created an incredible business surrounding an incredible product. There's clearly growing demand for their products as environmental conditions continue to shift our views of energy. SCTY is a company that is well-positioned to take advantage of this shift in the energy sector and, soon, as a Tesla subsidiary, the sky is the limit, in my opinion!