Are you're saying this from a short-term financial perspective?
I personally think it's too early to tell if it was a stupid move. Elon Musk had a plan, and his plans do seem to work out for the most part given some time.
It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.
> Are you're saying this from a short-term financial perspective?
Absolutely. Tesla's risk isn't long-term at all. Its all about the short-term risk.
Just think about Tesla's debt schedue.
* CUSIP 83416TAA8 -- $188,058,000 of Solar City Debt on November 2018.
* CUSIP 88160RAB7 -- $920,000,000 of Tesla Debt on March 2019. (Not part of SolarCity, but it has to be part of the calculus).
* CUSIP 83416TAC4 -- $566,000,000 of Solar City Debt, on November 2019.
Imagine how much easier 2019 would have been if Tesla didn't have to worry about $740 Million of Solar City debt coming due.
As a result, Tesla's CapEx spending (ie: building factories, buying factory equipment money) has dropped dramatically.
That doesn't even get into the stock-dillution issue either. Millions of shares were issued, reducing Tesla shareholder voting power, and your representation of the company. Solar City investors joined with Tesla investors as a freebie, part of the deal.
---------
So now that we've talked about the costs of merging the companies. What exactly has SolarCity done for Tesla? Absolutely nothing. Tesla has been given hundreds-of-millions of dollars in debt, and millions of shares worth of dillution... with nearly nothing in return.
SolarCity employees and contractors were fired or laid off for the most part. SolarCity's deal with HomeDepot has evaporated. And finally the Gigafactory 2 is barely operational. The Solar Roof is years late and sales / revenue of SolarCity are completely ignorable.
Oh, and future Solar City debt will come due. There's also a 2020 bond due (I can't figure out how much it costs though). Its not like Tesla is close to paying off all that old debt yet.
We're looking at a ton of downsides with almost no visible upsides. Even after a year of waiting, all the touted "potential upsides" (Solar Roof, etc. etc.) are basically dead.
> We're looking at a ton of downsides with almost no visible upsides.
Now that's not quite true. We've maintained the idealized (idolized?) Musk as an infallible visionary an engineer.
(I say this as a huge Musk fan - I think his image/public perception play a big role in keeping Tesla afloat in hard times.. even when those hard times are caused by less-than-stellar tweets)
> Are you're saying this from a short-term financial perspective?
I'd argue it was a stupid move from a short-term, long-term, and even medium-term financial perspective. Not only did TSLA subsume all of SCTY's debt, they diluted their shares doing so, and most analysts of TSLA value the solar/energy business at a 0 despite the $2.6 billion acquisition. How many other businesses can make multi-billion dollar acquisitions that people think are goose eggs two years later without that being considered a bone headed move.
> It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.
And why did they have to do that? Because Tesla had been negative free cash flow for so long that they had to stop spending any additional money on Capex. Had they been in a better financial situation, like, for instance, like they would be if they didn't do this acquisition they might have been able to invest in future growth and wouldn't have done two series of layoffs in the last 6 months.
Are you're saying this from a short-term financial perspective?
I personally think it's too early to tell if it was a stupid move. Elon Musk had a plan, and his plans do seem to work out for the most part given some time.
It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.