Chris Lau
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Chris Lau in Value Stocks,

SolarCity is Toast

The impact of Tesla (TSLA) as a white knight for SolarCity (SCTY) is unwinding. Analysts are downgrading it and the deal for Tesla buying it may lose shareholder support.

Tesla’s SolarCity buyout is in serious doubt. With the stock down 31 percent in the last month and near yearly lows, expect the $3 billion cash raise from Tesla to end the deal. Glass Lewis and ISS will likely recommend AGAINST the deal.

The market is voting Tesla must end this deal. Just look at First Solar (FSLR) reeling on the markets. It is profitable and has no exposure in the consumer space. SolarCity is nearly bankrupt and loses massive amounts of money every quarter. If CEO Elon Musk really wants SCTY, he should find investors and take the company private. Tesla shareholder should not suffer from the dilution and lack of benefits from the proposed, vertical integration.

Bottom line

Remember that it gets darkest before going pitch black. SCTY bullish should realize that and exit and avoid this company.