TSLA's market cap declines about $3 Billion on the news of their take over bid for SCTY (SolarCity Corp) - market cap $2.2 billion.
The Foolishness of Elon... They probably had to bail out STCY, after all you can't let your cousin go bankrupt. By the way market caps are an artifical number.
Scty has been hurting the last 18 months....without this buyout it looked like solar city was headed to the single digits....and to think everyone thought this solar thing was going to take off.....I might see one house out of thousands where I am with solar.....I only know one guy with it....anyway elon is buying elons company...pretty weird......
Because the market is pricing in that TSLA will lose more than 2.2 billion trying to turn SCTY around.
It also could be an investment opportunity as risk arbs come into sell and market makers let them take the stock price down.
That is actually close to true as SCTY was having very hard time. It dropped from $88.35 to $21.88 which is 75% down over the past 2 years. Tesla bought the unprofitable company which has a lot of debt, trouble with production and all other problem. Now, all CSTY problem will become Tesla's problem. If thy really wanted something with alternative energies, they should wait for another year and they would buy SCTY for pennies. The questionable bailout may push many institutional investors to start dumping the TSLA stock. If it happens it going to be bad....