Elon Musk’s SolarCity Files for an IPO

It has promising leadership, but some serious financial questions

   

The cleantech space has struggled with public offerings over the years, but things might be different with SolarCity, which has filed for an IPO.

Tech uber-entrepreneur Elon Musk — the mastermind behind Tesla (NASDAQ:TSLA), SpaceX and eBay’s (NASDAQ:EBAY) PayPal — co-founded the company back in 2006. The other co-founders include Musk’s cousins, Lyndon, and Peter Rive.

As of now, SolarCity is the No. 1 solar installer in the U.S., with more than 31,600 customers. It boasts a mix of residential customers, government departments (U.S. Military) and businesses, such as Wal-Mart (NYSE:WMT) and Intel (NASDAQ:INTC).

SolarCity has benefited from the plunge in solar panel prices. Also, the company has built an attractive business model based on leasing, which means customers don’t have to pay large upfront fees.

For the first half of 2012, revenues came to $71.4 million, up from $20.3 million in the same period a year ago. However, SolarCity has suffered a hefty loss of $23 million so far this year.

Needless to say, SolarCity certainly comes with risks — perhaps most importantly, its reliance on federal tax credits. Fiscal cliff or not, the U.S. is going to see cutbacks; depending on who’s doing the cutting, such credits could be in jeopardy.

Also, the Internal Revenue Service has recently audited two of SolarCity’s investment funds. No doubt, this likely will be a hot topic on the company’s road show, which should gear up within the next couple weeks.

SolarCity’s underwriters include Goldman Sachs (NYSE:GS), Credit Suisse (NYSE:CS) and Bank of America (NYSE:BAC) Merrill Lynch.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/elon-musk-solarcity-files-for-an-ipo/.

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