SolarCity (SCTY) Climbs On $160 Million Deal

SolarCity Corp (NASDAQ: SCTY)

SolarCity is having an incredible day in the market, and for good reason. The company recently closed a deal that will drive $160 million in revenue. Today, we’ll talk about the details of the deal, how investors reacted to the news, and other factors that are likely to lead to gains for SCTY. So, let’s get right to it…

SCTY Lands $160 Million Deal

The big news today causing the investor excitement is the fact that SCTY landed a $160 million deal. The deal was actually penned on Friday, January 22nd. Under the deal, SCTY will be working on a solar facility over the next five years. The facility is secured by a strong portfolio of high-quality, long-term customers. With the new financing, SCTY will be able to continue growth and continue offering power that is generated by its solar energy systems for far less than the price they pay for utility bills from other forms of power. All in all, this is incredible news as it will allow the company to continue expanding the production of energy through the use of its solar systems.

How SCTY Reacted To The News

As investors, we’ve learned that any time there is positive news with regard to a publicly traded company, we can expect to see gains in the value of the stock. That’s exactly what we’re seeing as a result of the new funding deal. Currently (4:15), SCTY is trading at $34.24 per share after a gain of 11.82%.

Other Factors That Are Likely To Lead To Gains For SolarCity

While the news of the $160 million deal is definitely positive news, it’s not the only news that insinuates that SCTY is likely to climb in the market. As a matter of fact, we’ve seen two big stories over the course of the past couple of months that insinuate that gains are coming for the solar sector as a whole relatively soon. Essentially, the global view with regard to how energy is produced is changing, and in a big way! The bottom line is that it has been proven that the burning of fossil fuels has detrimental effects on the environment. As a result, governments are getting involved, and pushing for more renewable energy production. Here are the two big stories that show the change in tides in the energy sector as a whole…

  • Paris Climate Change Deal – Recently, Paris has come to a landmark climate change deal with 195 other countries. Under the deal, the countries involved have agreed to work to reduce the emission of greenhouse gasses in their countries. The only way to do this is to reduce reliance on the burning of fossil fuels and shift to renewable, cleaner forms of energy. As a result, we can expect to see increased demand for renewable energy systems like those offered by SCTY.
  • Federal Tax Credit – Another big story is a federal tax credit from the United States government. For quite some time, the United States government has offered a 30% tax credit to businesses and consumers that made the decision to install renewable energy systems in their homes or offices. This credit was set to expire in the beginning of 2014. However, in December, news surfaced that the tax credit would be extended past 2014. This will also increase demand for SCTY systems.

All in all, things are headed in a great direction for SCTY and the renewable energy industry as a whole. As a result, there’s no reason to expect anything, but positivity out of the stock moving forward.

What Do You Think?

Where do you think SCTY is headed moving forward and why? Let us know your opinion in the comments below!