Shares of SolarCity jumped 17.58 percent in regular trading today, as investors applauded its decision to purchase solar-panel manufacturer Silevo, which had plans to build a factory in New York. SolarCity intends to build the plant and scale it to “capacity greater than 1 GW within the next two years.”
The deal tipped the scales at a total of $350 million, with $150 million of that coming as earnouts that will be paid provided the “achievement of certain milestones,” according to an SEC filing. SolarCity ended the day worth just under $6 billion.
Investors loved the idea. SolarCity has long installed solar technology, but has not built panels. The goal, according to Elon Musk, an investor in the company, is to develop panels that will allow for “unsubsidized solar power to cost less than grid electricity from coal or fracked gas.”
To pull that off, SolarCity essentially thinks that it can not only build better panels, but that the market will accept the new supply. The company noted in its blog post that announced the deal that “there is excess supplier capacity today” in the solar panel industry. So this is a material wager.
According to a recent Form 4, Elon Musk owns about 21,044,146 shares in the company, which are worth, after today’s price pop, around $1.36 billion. Musk, along with other shareholders, had a pretty good day.