Tesla’s Offer to Acquire SolarCity
Twenty-four hours ago, Tesla Motors (TSLA) CEO Elon Musk made public an offer to acquire SolarCity (SCTY), explaining that the result would be a company best prepared to serve its customers’ entire energy needs, ideally using solar energy to power homes and cars and doing it in the most energy-efficient way possible.
Since then, TSLA has gapped lower and SCTY has gapped higher, which is perfectly normal behavior after such an announcement.
Furthermore, at least 1,001 commentators have offered their own “expert” opinions on Elon’s proposal, and my perception is that the majority of these analyses have been negative—which is no surprise.
Most people are rather short-term oriented (note their ability to offer a response in far less than 24 hours) and most people think far smaller in scale than Elon Musk.
But Musk tends to think longer-term and larger-scale than at least 99.99% of us, and I believe he’s looking beyond the short-term dollars to the long-term synergies, for both his companies AND THE PLANET. (Most folks fail to consider that aspect, but it’s worth remembering that Tesla’s Mission Statement is to “to accelerate the world’s transition to sustainable transport.”)
Now, it’s possible the deal will not go through (Musk is choosing not to vote due to a conflict of interest) and all this knee-jerk analysis will be for naught. And it’s possible the deal will succeed but the new, more complex Tesla will struggle. There are countless unknown factors ahead, from competitive pressures to the challenges of scaling up production of both cars and batteries to the changing retail and regulatory landscape in various states and countries.
If Tesla succeeds however (and I believe it will), we will all win—with the exception of those people dependent on the current petro-energy industry, which is doomed to shrink either slowly or less slowly.
If you own TSLA with a large profit, as many of my early subscribers do, I recommend that you continue to hold your shares. The future is still bright.