Last Tuesday, Tesla Motors announced the purchase of SolarCity, a company that works on solar energy technology, and CEO Elon Musk couldn’t be more excited about it. He is all in on the intelligent energy market, and does not want to stop only on cars.
According to the tech mogul, any person that wants to go green by buying a Tesla electric car is likely to be interested moving forward to a solar powered house. However, technology advancement is not a synonym of a profitable business, something that the investors are well aware off.
Both companies have worked very hard on intelligent and viable ways to substitute fossil fuels which is not only great, but necessary, according to a lot of studies. That said, they have a horrible financial history which only got worse with the 10% drop Tesla Motors shares reported earlier today. Obviously, the latter’s stock actions raised after the purchase was completed, but the investors are really skeptical of Mr. Musk’s decision this time.
“While no doubt the Tesla bulls will hail the combination as visionary, we believe the assumption of another $2.6 billion of debt to fold in a solar company with limited synergies and uncertain growth/cash prospects only reinforces our negative view of Tesla,” Barclays analyst Brian Johnson told to the press.
Elon Musk’s #Tesla offers to acquire Elon Musk's #SolarCity for $2.8B https://t.co/KiBpv8gm1y via @techcrunch
— Indice (@indice_energy) June 22, 2016
Moving forward the future is very, very expensive
There is a reason for so many scientists to endorse politicians, host shows, and in general, engage in publicity. Money moves the world, especially the scientific world. They have the knowledge and the talent, but all their projects need funding, and that is why they have to effectively sell them to companies that sometimes have no concrete idea what they are investing in. Elon Musk, however, is a man associated with both technological advancement and successful businesses.
He said last year that Tesla Motors is going enter into a mass production period, and he stayed firm with his statements this week, by saying that the company is going to start reporting profits this year. Moreover, Musk stated that by purchasing SolarCity the organization was not only ensuring gaining this year, but it is also increasing it.
The people paying the bills understand that when investing in technology, the first period is entirely focused on research. Then, testing and improvement before finally placing a product on the market. It is an expensive process that has worked for many people.
However, Tesla’s investors claim that the company already owns a lot of money, more than $6 billion, which makes a purchasing decision controversial, especially considering that SolarCity’s director is Lyndon Rive, who is at the same time Musk’s cousin. Moreover, the wealthy inventor has 22% of the company’s shares which is raising a lot of eyebrows among the shareholders.
Tesla makes offer to acquire SolarCity https://t.co/bo6TaeGvCJ
— Tesla (@TeslaMotors) June 21, 2016