A Shinning ExampleCleantech IPOs have gotten a lot of hype in the past, but they've rarely delivered for investors (at least so far -- maybe some now public cleantech companies will bounce back later). SolarCity, the largest solar installer in the U.S. and brainchild of Elon Musk, might be different. The company went public yesterday, and shares are already up from the initial IPO price of $8 to over $12 right now, a more than 50% gain in a day. Not bad!
At the current price, this gives SolarCity a market valuation of $880 million, and Elon Musk's 31% share is worth about $272 million.
Part of what makes SolarCity different from other cleantech startups is its business model, which actually benefits from the competition and falling prices in the solar industry:
Instead of playing in the cutthroat world of solar-panel production, SolarCity, founded in 2006, focused on leasing solar panels to consumers and businesses and making this process easier. It helps people calculate how much money they can expect to save with solar panels, sets up the financing, and coordinates the installation of the panel. Through the first nine months of the year, SolarCity brought in $103 million of sales. Its business has been booming, although the company has yet to turn a profit and is likely to see a number of the state and federal tax credits from which it benefits decline over time. (source)
Lyndon Rive, the CEO of SolarCity and Elon Musk's cousin, had this to say about previous solar IPOs: “Clean energy has taken a big hit, primarily on the solar side, because of a lot of the companies there were producing a commodity,” Lyndon says, referring to the solar-panel and substrate makers. “The stocks were overhyped because of overdemand and undersupply, and then supply caught up. This should not be a measurement of the market’s willingness to adopt clean energy. The market adoption is almost doubling every year.”
So far SolarCity has installed solar systems on over 45,000 buildings and doesn't seem like its slowing down. In fact, funds raised in the IPOs could be used to accelerate the rate of growth of the company, and possibly expand operations to other countries.