SolarCity Corp (NASDAQ: SCTY)
SolarCity is having an incredible day in the market today, and for good reason. The reason for the gains follows up gains we saw last week as Tesla Motors (NASDAQ: TSLA) made an offer to acquire the company. However, that’s old news. The new news is that it’s likely that the acquisition will actually happen. It all surrounds a vote. Today, we’ll talk about why an acquisition is likely, what we’re seeing in the market, and what we can expect to see from SCTY moving forward. So, let’s get right to it…
Here’s Why SCTY Is Climbing
Last week, Tesla made an offer to acquire SolarCity. At the time, the stock gained in a big way. However, there were some loops to jump through and it soon fell back down. Nonetheless, we’re seeing big gains today, and for good reason.
At this point, the acquisition of SCTY is left up to a vote. The vote will be among Tesla’s institutional shareholders, not the general share holding public. This creates a bit of an interesting situation. At the moment, a large majority of institutional shareholders that hold TSLA also hold SCTY.
If the vote passes and Tesla does indeed acquire SolarCity, it will likely be good for all involved. However, those that are likely to take the brunt of the profits due to the deal are the institutional shareholders that have positions in both stocks. Because institutional shareholders will be the voters on the deal, it only makes sense that a large majority are going to vote the acquisition into action.
One of the first things that we learn as investors is that acquisitions are big news. Any time an acquisition happens, we tend to see big gains. So, knowing that institutional investors are going to be the ones making the decision, and that they have the most to gain from an acquisition, it seems as though an acquisition isn’t only likely, it’s imminent.
What We’re Seeing In The Market
As mentioned above, SCTY is having an incredible time in the market today. After all, nothing seems to stir up investors quite like news surrounding acquisitions. With the acquisition plans looking incredibly likely to pass, it only makes sense that we’re seeing big gains today. Currently (3:44), SCTY is trading at $22.71 per share after a gain of $0.51 per share or 2.30% thus far today. While a 2%+ gain may not seem like much, today it is. After all, the rest of the global market is sitting in the red at the moment!
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from SolarCity. First and foremost, the news surrounding the possible acquisition of the company is overwhelmingly positive. With institutional investors casting their votes soon, it seems as though the acquisition is indeed going to happen. Naturally, this will send the value of SCTY skyrocketing.
Nonetheless, the acquisition isn’t the only reason that I maintain a bullish opinion on SCTY. At the end of the day, the company is in the right industry at the right time, and it’s making all of the right moves. Global views of how energy is generated are changing. Consumers, businesses and governments are all looking to reduce their reliance on fossil fuels for environmental reasons. This has and will likely continue to increase demand for SolarCity products. On top of this, the company has been working on re-arranging its finances for the better, making it an even stronger pick. All in all, I’m expecting to see gains out of SCTY moving forward.
What Do You Think?
Where do you think SCTY is headed and why? Join the discussion in the comments below!