SolarCity Said to Price Its I.P.O. at $8 a Share

SolarCity, which installs solar panels for homeowners, has priced its initial public offering at $8 a share, well below its earlier estimates, a person briefed on the matter told DealBook on Wednesday.
The company sold 11.5 million shares, raising about $92 million, much less than previously expected.
As recently as Tuesday, SolarCity expected to raise as much as $151 million, at a price of $13 to $15 a share. The pricing came a day later than expected, as the company’s underwriters sought additional time to price the stock, this person said.
Earlier on Wednesday, the company filed a revised prospectus with the Securities and Exchange Commission with the lower offering amount.
SolarCity’s offering, expected to be the first major I.P.O. in so-called clean tech in some time, was being closely watched by competitors and investors. How close the company comes to reaching its goal is likely to be seen as a validation or repudiation of its business model, which finances and installs rooftop solar systems in exchange for long-term monthly payments from its customers.
An industry leader in offering homeowners free systems in exchange for the solar leases, which typically run 20 years, SolarCity has thus far been able to raise money to cover its upfront costs from investors like Google, U.S. Bancorp, Morgan Stanley and Bank of America Merrill Lynch, and then take advantage of clean energy incentives to help offer a return.
Facing a glut of panels and waning subsidies, the global solar industry has fallen on hard times – cutting back production, laying off workers or declaring bankruptcy – and alternative energy start-ups have had trouble finding buyers for their stocks.
BrightSource, which develops solar thermal power plants, abruptly canceled a long-anticipated I.P.O. this year, while Enphase Energy, which makes solar inverters, ended up selling its shares at half the original target price.
But on the customer side, interest in solar energy has been growing rapidly, and so business has boomed for installers like SolarCity, especially in states with solar or renewable energy mandates and high electricity prices at peak demand.
Lyndon Rive, the company’s chief executive, has said in the past that raising money has been easy as investors see the approach as relatively safe because customers tend to pay their electricity bills, even in a downturn.
“We have customers that are foreclosed,” he told The New York Times earlier this year. “They’re still paying their electric bill, so they still pay us.”
Still, some analysts have cautioned that the company faces hurdles, like the high cost of bringing in new customers, that could keep it from reaching mass scale.
The company reported $59.6 million in revenue last year, an 84 percent gain from 2010. But the company has found it hard to turn a profit. It reported a $61 million operating loss last year. Stripping away losses born by joint venture partners, it earned $43.5 million for its stockholders.