SolarCity Corp (NASDAQ: SCTY)
SolarCity is having an incredibly strong day in the market today, and for good reason. The company recently announced that it had been made an offer to be acquired. Nothing seems to get investors quite as excited as news of mergers and acquisitions. Today, we’ll talk about the news, how the market reacted, and what we can expect to see from SCTY moving forward.
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SCTY Receives Takeover Bid
As mentioned above, last night it was announced that SolarCity received an acquisition offer. The offer came from Tesla Motors (NASDAQ: TSLA), another company that Elon Musk is an enormous part of. In the takeover offer, TSLA said that it would be willing to pay between $26.50 and $28.50 per share to acquire SCTY. This represents a decent premium.
The acquisition offer makes a lot of sense. The reality is that SCTY falls right in line with Tesla’s goals. The mission at TSLA has always been relatively simple. The company is working to accelerate the world’s transition to sustainable transportation and always has been.
The acquisition of SolarCity will allow Tesla the use of proprietary technology when it comes to their electric vehicles. However, I don’t think it will stop there. In fact, if Tesla does acquire SCTY, I’m expecting that the company will change its mission to include the acceleration of the world’s transition to sustainable energy overall.
How The Market Reacted To The News
As investors, we know that the news moves the market. Any time positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company. In the case of SCTY, the news that was released was overwhelmingly positive. After all, if the company is acquired and a premium is paid, investors will realize large returns in a very short time frame. Who doesn’t like big returns quickly? With that said, the stock is gaining big in pre-market trading today. Currently (9:05), SolarCity stock is trading at $23.85 per share after a gain of $2.66 per share, or 12.55%, thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from SCTY. While the news of a possible acquisition does play into my opinion here, it’s not the only reason I maintain a bullish view.
The reality is that SCTY is a world leader when it comes to the solar power industry. The stock fell on hard times, largely as the result of fears revolving around Sunedison. However, SolarCity has a completely different business model. So, comparing the two companies is like comparing apples and bananas. Sure, they are both fruits, but they are very different. As a result, I believe that SCTY is a stock that is severely undervalued at the moment, and it deserves quite a lift. With the new acquisition offer, the stock may get the lift it deserves quickly. Nonetheless, even if the acquisition doesn’t go through, I’m expecting to see big long-run gains here.
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What Do You Think?
Where do you think SCTY is headed moving forward? Join the discussion at TalkTRENDZ from CNA Finance!
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