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SolarCity Delays Its IPO

It looks like the company will cut the pricing on the deal


Yesterday, SolarCity delayed its IPO because of resistance from investors. Instead, the deal is expected to price tonight. The lead underwriters include Goldman Sachs (NYSE:GS), Credit Suisse (NYSE:CS) and Bank of America Merrill Lynch (NYSE:BAC).

According to a report in Reuters, SolarCity plans to issue 11.5 million shares at $8 a piece. This means the valuation will be cut nearly in half to $585 million.

SolarCity is a top provider of installation services for solar panels for homes and businesses. And growth has been strong. For the first nine months of 2012, revenues soared by 167% to $103.4 million. Still, there was a net loss of $77.9 million.

SolarCity is the mastermind of Elon Musk, who co-founded breakout companies like eBay‘s (NASDAQ:EBAY) PayPal, Tesla (NASDAQ:TSLA) and SpaceX. His involvement apparently wasn’t enough to get investors excited, though, despite the fact that he said he would invest $15 million in the offering.

Of course, it’s important to remember that the solar industry has been particularly weak over the years. It does not help that energy prices have been declining lately and that there will likely be cutbacks in subsidies, especially in the U.S. and Europe.

As a result, the IPOs in the solar industry have been dismal. Just take a look at Enphase Energy (NASDAQ:ENPH), which makes next-generation solar inverters. In late March, the company pulled off its IPO at $6 a share and the stock has since plunged to $3.

Tom Taulli runs the InvestorPlace blog IPO Playbook, 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” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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