Post-announcement trading in both TSLA and SCTY indicates that the market agrees. [bold added]
Musk said the deal was about the “blindingly obvious” synergies of one-stop shopping for a Tesla electric car, a home battery pack, and SolarCity rooftop panels.Of all the celebrity CEO's in the Bay Area, Elon Musk , we said last year, was the one to watch, but not for the reasons we are watching him this week.
Nearsighted investors didn’t see those synergies. Instead, they saw two unprofitable companies aligning behind the name with the better cost of capital, so they can raise the billions they need to achieve Musk’s bold ambitions. By week’s end, Tesla shares (ticker: TSLA) were 12% lower, at $193.15, trimming the announced value of Tesla’s all-stock offer accordingly. More embarrassing for the entrepreneur, SolarCity stock (SCTY) closed Friday at $22.20, two bucks under the $24-to-$25 value of Tesla’s offer. That means investors doubt Musk can swing the deal, even though he chairs both companies and owns about a quarter of each.