SolarCity Files for IPO under Cloak of Secrecy

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Debra Fiakas CFA

Image by Olga Palma via Wikimedia Commons

On the first word of an initial public offering investors flock to the Securities Exchange Commission website to get financial details on the heretofore private company.  Earlier this week solar energy solutions provider SolarCity Corporation announced its IPO plans, but investors will have to wait a while to get a look behind the SolarCity curtain.  The company is among the first to take advantage of a new “confidential” registration for emerging growth companies.

The process is provided for by The Jumpstart Our Business Startups Act (JOBS Act) signed into law by President Obama in early April 2012.  Any emerging growth company that has never had an IPO date is allowed to submit a registration statement to the SEC for a non-public review.  The filing must be nearly complete so there is no skimping on lawyers to draft the document or auditors to tote up the numbers.

SolarCity will have to file a public document before heading out for the first roadshow.  So eventually we will learn how much revenue SolarCity makes from helping businesses and homeowners install solar panels on their roofs and whether there is any profit in it  –  just not this week.

One thing we might know already is that SolarCity has some cash in the bank.  Earlier this year SolarCity raised $81 million through a private offering.  Venture investors Silver Lake Kraftwerk and Valor Equity Partners led the deal.  That money was slated for a sales and marketing program and possible acquisitions.

I think it will be worthwhile to stay tuned for the SolarCity deal.  BrightSource Energy scrapped its plans for a public offering, but I believe SolarCity will come through.   Its venture partners are well connected in the capital markets. Not to mention that Chairman Elon Musk and CEO Lyndon Rive have the right experience and plenty of financial incentive to see an IPO through to the end.

Just between you and me, BrightSource’s concentrating solar technology seems a great deal more exciting than SolarCity’s rooftop panels and assorted energy savings ideas.  Without the benefit of financial metrics from either of them, I am guessing that SolarCity is much closer to turning a tidy profit.  That means SolarCity shares might be quicker to trade against real earnings.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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