Hoo Boy – Tesla Buying SolarCity

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This is actually kind of comic. Anyway, a bit of background…..

A good friend of mine is a senior executive at SolarCity. A couple of months ago, he asked me what his prospects were with respect to making money on his sizeable options grant. I asked them the strike price, and it was something like $75.

I kind of winced, because the stock had been beaten down into the 20s. I looked at the graph anyway, and I told him (with a reminder that I’m a permabear) that the chances of making money were slim to none, and Slim left town already. So he wasn’t happy to hear that, and every time he saw me, he’d tell me (in a friendly way) how I was wrong.

Well, the math is simplified now, because apparently TSLA is going to buy SCTY for something like $28 a share. SCTY is rallying right now, up about 20%, trading about where I’ve got the arrow:


Whereas Tesla is getting smacked down by about 10%, about where the arrow is.


“Well”, you might say to yourself, “that’s not so bad – – a 20% rise in exchange for a 10% drop. Yay, Elon!” Well, not so far. Keep in mind Tesla’s market cap is SIXTEEN TIMES as big as SolarCity’s. So the aggregate of shareholder value destroyed is measured in the billions.

It just strikes me as a bit self-dealing-ish that Elon Musk would basically buy one of his companies by way of another one of his companies. Meh. I don’t care. I just thought I’d share the little fun fact above.