Billionaire entrepreneur Elon Musk added to his position in SolarCity when the stock dipped recently. Musk is the chairman and largest shareholder of the residential solar installer. He increased his holdings in the company by close to 0.6% when the stock sank to the lowest level since October 2013.
Musk buys 123,510 shares of SolarCity stock
Musk revealed in an SEC filing after the market close on Monday that he had bought 123,510 shares of SolarCity at $40.48. That means he spent $5 million to buy those shares. Elon Musk, who is also the founder of Tesla Motors and SpaceX, currently owns 20,805,082 shares of SolarCity stock. The U.S. residential solar installer surged 7.03% to close at $43.87 on Monday, defying a global stock meltdown led by China.
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Musk expanded his position just days after hedge fund manager and founder of Kynikos Associates, Jim Chanos revealed that he was shorting SolarCity. Chanos said Friday on CNBC’s Halftime Report that the San Mateo-based company’s business model was similar to that of a subprime financing company. Chanos’ comments drove down the stock 13% on Friday, the biggest single-day decline since November 2013.
SolarCity CEO responds to Chanos
SolarCity CEO Lyndon Rive responded to Chanos by saying that the hedge fund manager’s subprime analogy was “dramatically wrong” and he was “intentionally misleading people by saying it’s subprime.” Rive pointed out that the average credit score of SolarCity customers was 750, much higher than the 640 score that is considered risky.
SolarCity shares have declined more than 29% in the last three months. Goldman Sachs said in a research note that financing concerns affecting solar stocks will have a “limited impact” on SolarCity. The research firm’s positive commentary also helped drive the stock up on Monday. Last month, SolarCity launched a new plan to target small businesses as it looks to keep growing rapidly. The company said residential market will remain its focus in years to come.
SolarCity shares gained 6.22% to $46.60 in pre-market trading Tuesday.