SolarCity (Nasdaq:SCTY) is finally out. The IPO is done. They dropped the price, got the IPO investors frenzied and watched the after market price jump almost 50%. Well at least for one day.
Management had an apologia prepared about the higher sales price. They claimed institutional investors have bad memories of solar power and they stayed away from the party. Maybe.
They should have marketed themselves as an energy company. Stupid institutional investor for not getting that. They really are an energy company. Yeah well maybe. But they cut the price anyway and stayed with the old narrative.
Energy company. There are lots of energy companies. Most of them price off a carbon energy model.
What SolarCity does is install roof top solar panels, cut your electricity bill and take a middleman fee. Arbitrage. Broker. Flipper? They create a long-term twenty year cash flow.
Twenty years why that’s like a bond isn’t it. Yes grasshopper that is a bond. An unrated naked risk bond. Worse it is a long bond. Currently long bonds are the most dangerous high risk sector of the financial markets.
So why would you want to buy the equity version of an unrated long bond. Sucker deal.
No names of underwriters have been mentioned in s a few relevant media stories. They must be hiding like under a rock or something.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti