SolarCity Shares Shine in Debut

(Reuters) – Shares of SolarCity Corp jumped more than 50 percent during their market debut on Thursday, approaching the valuation the solar power company had sought before it was forced to slash its IPO price.

In early afternoon trading, the solar panel installer’s stock was up 51 percent at $12.10. It hit a session high of $12.70.

The San Mateo, California-based company backed by technology entrepreneur Elon Musk sold 11.5 million shares at $8, raising $92 million. It initially had planned to sell 10.1 million shares between $13 and $15 per share.

SolarCity is the top U.S. installer of residential solar systems and among Silicon Valley’s hottest clean technology companies. Its IPO has been widely anticipated in venture capital and solar energy circles.

The company has grown rapidly, largely because it allows customers to lease solar panels by paying a monthly fee, avoiding the hefty costs of an outright purchase.

Concern that the company’s original $1 billion valuation was too rich initially turned off potential investors, many of whom have been burned by the poor performance of cleantech stocks broadly and solar manufacturing stocks in particular, SolarCity Chief Executive Lyndon Rive said in an interview.

“We don’t manufacture equipment, we sell cheaper clean energy. I thought that that would be enough to convince investors to look at the fundamentals of the business,” Rive said, adding that investors “just cannot take any risk.”

The $1 billion valuation would have made SolarCity the second-most valuable U.S.-listed solar company behind panel manufacturer and project developer First Solar Inc, which has a market capitalization of $2.6 billion.

At current trading levels, SolarCity’s valuation now stands at around $868 million. At the bottom end of its first expected pricing range, SolarCity would have commanded a valuation of about $930 million.

SolarCity has been hailed as one of Silicon Valley’s hottest cleantech companies in a sector that has seen its share of disappointments in the last year.

In April, solar power company BrightSource, which had received backing from top investors including Google Inc, withdrew its IPO.

The sector has also seen several high-profile flame-outs including the bankruptcies of solar company Solyndra and battery maker A123 Systems.

Co-founder of Tesla Motors and PayPal, Musk is SolarCity’s chairman and the first cousin of its co-founders, Lyndon and Peter Rive. He holds a 31 percent stake in the company and said he would buy $15 million of SolarCity stock in the IPO.

SolarCity’s venture capital backers include Draper Fisher Jurvetson, DBL Investors, Mayfield Fund, Shea Ventures and Valor Equity Partners.

SolarCity reported a net loss of $80 million on revenue of $103.4 million for the nine months ending September 30.

Underwriters for the IPO include Goldman Sachs, Credit Suisse and Bank of America Merrill Lynch.

(Reporting by Olivia Oran and Nichola Groom; editing by Gerald E. McCormick, Matthew Lewis and David Gregorio)

Image credit: SolarCity