Investor's Corner
Tesla – SolarCity merger: the devil is in the details

On Monday August 1st, Tesla announced that it had reached a definitive agreement to acquire SolarCity. Tesla provided investors with an Investor Presentation slide set, and a 180 pages long Form 8-K filing.
Investor Presentation
In the slide presentation titled Tesla to acquire SolarCity, the company provided details for the proposed transaction.
Tesla would acquire SolarCity in an all-stock transaction valued at $2.6 billion. SolarCity shareholders will receive 0.110 shares of Tesla stock for each share of SolarCity valued at $25.37 per share. The transaction is expected to close in Q4 2016 and subject to the approval by a majority of disinterested shareholders at both SolarCity and Tesla, to be voted upon at each respective shareholder meeting.
The Tesla SolarCity “strategic” combination would:
- Accelerate the transition to sustainable energy
- Create world’s only integrated sustainable energy company
- Drive products development and innovation
- Catalyze solar energy adoption
- [Provide] substantial cost efficiencies.
The presentation stated that SolarCity provides best-in-class rooftop solar installation costs of $1.92 per watt as of 4Q15, and is America’s #1 vertically integrated provider of residential and commercial solar, with a 35% share of the residential market and 14% share of the commercial market in 2015. Tesla is the world’s fastest growing car company, with an 18% market share of the “large Luxury sedans” in 2015 with its Model S.
The combined company would leverage Tesla’s design and manufacturing expertise:
- Speed development of beautiful, differentiated and technologically superior products
- Improve solar value proposition by integrating storage, reducing system cost and improving reliability
- Fully integrate product suite for a seamless user experience, delivering an improved, lower-cost product for customers
- Develop products for residential, commercial and grid-scale applications
- Take advantage of SolarCity’s industry-leading project finance capabilities
One of the major points of the slide presentation is that the combined companies would provide “substantial cost efficiencies”, with $150 million of direct cost synergies expected to be achieved in the first full year after closing the transaction.
The cost synergies would be driven by sales and marketing efficiencies, and corporate and overhead savings. The value proposition is improved by lowering hardware costs, reducing installation and service costs, improving manufacturing efficiency, reducing customer acquisition costs, and cutting capital costs.
Form 8-K Filing
The very long document filing includes the usual boilerplate for merger transactions, but also reveals quite a few interesting tidbits, buried into the document. These are quotes from the document.
Stockholders of SolarCity will be asked to vote on the adoption and approval of the Merger Agreement and the Merger, and stockholders of Tesla will be asked to vote on the approval of the Merger and the Share Issuance, at special meetings of the stockholders of SolarCity and Tesla, respectively, that will be held on dates to be announced.
“The Merger Agreement and the Merger be adopted and approved by stockholders of SolarCity, including by the holders of a majority of the total votes of shares of SolarCity common stock […] that are not owned by Mr. Elon Musk and the other directors. other than Nancy E. Pfund and Donald R. Kendall, Jr.”
Similarly, “the Merger and the Share Issuance be approved by the stockholders of Tesla, including by the holders of a majority of the total votes of shares of Tesla common stock […] that are not owned by Mr. Elon Musk and the other directors and the named executive officers of SolarCity and certain of their affiliates.”
This means that the approval will likely rely on mutual fund managers and banks that hold large chunks of both Tesla and SolarCity stock.
As part of the agreement, SolarCity has a 45-day period known as a “go-shop”, which runs through September 14, 2016. This means that SolarCity is allowed to solicit alternative proposals during that time.
The all-stock transaction, with an equity value of $2.6 billion, is based on the 5-day volume-weighted average price of Tesla shares as of July 29, 2016. Under the agreement, SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the 5-day volume weighted average price of Tesla shares as of July 29, 2016.
The “Excluded Company Parties”, i.e. the directors and named executive officers other than Nancy E. Pfund and Donald R. Kendall, Jr., that will not be able to vote at the Company Stockholders Meeting include Lyndon R. Rive, Peter J. Rive, Tanguy V. Serra, Hayden D. Barnard, Seth R. Weissman, Elon Musk, John H.N. Fisher, Antonio Gracias and Jeffrey B. Straubel.
While most stock options equity awards of each company will be automatically converted into stock options of the “merged” company, the stock options set forth in a “Company disclosure letter” shall be cancelled for no consideration. It turns out that these options are the ones that were granted by SolarCity to Lyndon and Peter Rive, the CEO and CTO of SolarCity. These options amounted to about $128 million, and would have been earned over a 10 year period, based on achieving a set of goals of SolarCity stock price and operational results. For some unknown treason, Elon Musk’s cousins will get the shaft in the merger transaction related to their stock options.
But do not feel too bad for the cousins. According to a research report from Reuters, that analyzed the results of the merger, “three of Musk’s relatives, including brother Kimbal Musk and cousins Lyndon Rive and Peter Rive, will own a combined stake of 0.5 percent in Tesla. Kimbal Musk is a director of Tesla.”
According to Reuters “Elon Musk and key institutional investors will probably tighten their control over electric car maker Tesla Motors Inc after it acquires sister company SolarCity Inc.” “The largest institutional shareholder, Fidelity Management and Research, will see its stake grow from 12.2 percent to 13.4 percent. Two Fidelity-managed funds, Fidelity Contrafund and Fidelity OTC, together will control another 7.3 percent, up from 6.5 percent.”
Musk will remain the largest individual shareholder, boosting his stake from 23.2 percent to 25.0 percent according to Reuters.
Note that Fidelity has already come out in favor of the merger.
“Musk, eight major institutional investors and the two Fidelity funds control 45.7 percent of Tesla. After the merger, the same group’s combined stake will rise to 49.0 percent.” “Other major institutional shareholders include Scottish investment manager Bailie Gifford & Co, which will maintain an 8.9 percent stake in the combined companies; T. Rowe Price Associates, 5.5 percent, and Vanguard Group, 3.6 percent. Big banks, including several Tesla lenders, also will maintain significant stakes after the merger: Bank of Montreal, 4.1 percent; Morgan Stanley, 3.0 percent; Goldman Sachs, 2.2 percent, and J.P. Morgan Chase, 1.0 percent.”
What this all means is that individual investors will have no say in the approval of the merger, and only a few more institutional investors are needed, besides Fidelity, to approve the merger. The only thing that could derail the merger is a third party bid for SolarCity, during the go-shop period. Given how debt ridden is SolarCity, the chance of of such a bid are fairly remote.
Market Reaction
The initial market reaction to the details of the merger agreement was mixed, but eventually turned negative. On Monday the stock reached $236, but closed at $229. On Tuesday the stock initially sold off even more to $221, closing the session at $227.
Looking at the chart, The MACD has started pinching, indicating a possible end of the MACD-run that started on July 1st. Anyone selling today would have had a nice $11 gain, over a 1-month period, a very nice return. I personally closed my July 1st call option trade (I was long Sept 230 calls) when TSLA reached $236 on Monday. I was planning to close my trade before the Quarterly report is released on Wednesday, and the high point of Monday made it a perfect exit. Notice that I never hold options or stock before a quarterly report, especially for a volatile stock as TSLA, as the post report swings are so wide that one can easily lose their shirt in the the span of a few hours.

Source: Wall Street I/O
Investor's Corner
Tesla welcomes Chipotle President Jack Hartung to its Board of Directors
Tesla announced the addition of its new director in a post on social media platform X.

Tesla has welcomed Chipotle president Jack Hartung to its Board of Directors. Hartung will officially start his tenure at the electric vehicle maker on June 1, 2025.
Tesla announced the addition of its new director in a post on social media platform X.
Jack Hartung’s Role
With Hartung’s addition, the Tesla Board will now have nine members. It’s been a while since the company added a new director. Prior to Hartung, the last addition to the Tesla Board was Airbnb co-founder Joe Gebbia back in 2022. As noted in a Reuters report, Hartung will serve on the Tesla Board’s audit committee. He will also retire from his position as president and chief strategy officer at Chipotle, and transition into a senior advisor’s role at the restaurant chain, next month.
Hartung has had a long career in the Mexican grill, joining Chipotle in 2002. He held several positions in the company, most recently serving as Chipotle’s President and Chief Strategy Officer. Tesla highlighted Hartung’s accomplishments in a post on its official account on X.
“Over the past 20+ years under Jack’s financial leadership, Chipotle has seen significant growth with over 3,700 restaurants today across the United States, Canada, the United Kingdom, France, Germany, Kuwait and the United Arab Emirates. Jack was named ‘CFO of the Year’ by Orange County Business Journal and Best CFO in the restaurant category by Institutional Investor,” Tesla wrote in its post on X.
Tesla Board and Musk
Tesla is a controversial company with a controversial CEO, so it is no surprise that the Board of Directors tend to get flak as well. Two weeks ago, for example, Tesla Board Chair Robyn Denholm slammed The Wall Street Journal for publishing an article alleging that company directors had considered a search for a potential successor to Elon Musk. Denholm herself has also been criticized for offloading her TSLA shares.
More recently, news emerged suggesting that the Tesla Board of Directors had formed a special committee aimed at exploring a new pay package for CEO Elon Musk. The committee is reportedly comprised of Tesla board Chair Robyn Denholm and independent director Kathleen Wilson-Thompson, and they would be exploring alternative compensation methods for Musk’s contributions to the company.
Investor's Corner
Rivian stock rises as analysts boost price targets post Q1 earnings
Rivian impressed with smaller-than-expected losses & strong revenue, pushing analysts to raise price targets.

Rivian stock is gaining traction as Wall Street analysts raise price targets following the electric vehicle (EV) maker’s first-quarter earnings report. Despite a dip after the announcement, optimism surrounds Rivian’s cost control and upcoming lower-priced cars.
Last week, Rivian reported a better-than-expected Q1 gross profit, surpassing Wall Street’s forecasts with adjusted losses of $0.48 per share against expectations of $0.92 per share. The company also reported a revenue of $1.24 billion compared to the $1.01 billion anticipated.
However, the EV automaker cut its 2025 delivery forecast and capital spending due to President Donald Trump’s tariffs. It explained that it is “not immune to the impacts of the global trade and economic environment.” RIVN stock dropped nearly 6% post-earnings, closing at $12.72 per share.
Wall Street remains upbeat about Rivian, citing progress toward launching lower-priced vehicles in 2026 and effective cost management. On Monday, Stifel analyst Stephen Gengaro raised his RIVN price target to $18 from $16, maintaining a “Buy” rating. He highlighted Rivian’s “solid progress” toward key milestones.
Conversely, Bernstein’s Daniel Roeska gave RIVN a “Sell” rating. However, Roeska also lifted his Rivian price target to $7.05 from $6.10, acknowledging “better” Q1 results. He warned that profitability remains distant and hinges on multiple product launches by the decade’s end.
Overall, Wall Street’s average price target for RIVN climbed from $14.18 to $14.31, a modest 13-cent increase reflecting positive sentiment. About one-third of analysts covering Rivian rate it a Buy, compared to the S&P 500’s average Buy-rating ratio of 55%.
On Monday, Rivian stock rose 2.7% to $14.64, slightly trailing the S&P 500 and Dow Jones Industrial Average, which gained 3.3% and 2.8%, respectively. The uptick may also stem from broader market gains tied to news of a temporary U.S.-China tariff suspension.
As Rivian navigates trade challenges and scales production at its Illinois factory, its Q1 performance and analyst support signal resilience. With lower-priced EVs on the horizon, Rivian’s strategic moves could bolster its position in the competitive EV market, offering investors cautious optimism for long-term growth.
Investor's Corner
Tesla (TSLA) poised to hit $1 trillion valuation again amid reports of Trump China deal
TSLA stock was up about 8% at $322.56 per share on Monday’s premarket.

Tesla shares (NASDAQ:TSLA) are on a tear on Monday’s premarket amidst reports that the United States and China have agreed to significantly roll back tariffs on each other’s goods for an initial 90-day period.
As of writing, the premarket price of TSLA shares suggests that the electric vehicle maker might end Monday with a $1 trillion valuation once more.
Tesla and China
TSLA stock was up about 8% at $322.56 per share on Monday’s premarket. As noted in a report from Barron’s, these prices suggest that the company could achieve a trillion-dollar valuation again, a level not seen since late February. Similar to Tesla, the S&P 500 and the Dow Jones Industrial Average were also up 2.8% and 2.1%, respectively, on Monday’s premarket.
The United States and China’s decision to roll back its tariffs would likely be appreciated by CEO Elon Musk. Despite working for the Trump administration’s Department of Government Efficiency (DOGE), and despite Tesla being least affected by the Trump administration’s tariffs due to its strong domestic supply chains in the United States, China, and Europe, Musk has noted that he is a supporter of non-predatory tariffs.
The United States and China’s Agreement
In a joint statement from the United States and China posted on the White House’s official website, the two countries agreed to lower reciprocal tariffs on each other by 115% for 90 days. This means that the United States will temporarily lower its overall tariffs on Chinese goods from 145% to 30%, as noted in an ABC 12 report. China, on the other hand, will also lower its tariffs on American goods from 125% to 10%.
The talks were led by Chinese Vice Premier He Lifeng and Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, as per the joint statement. Bessent shared his thoughts about the matter in a comment in Geneva. “The consensus from both delegations is neither side wants to be decoupled, and what have occurred with these very high tariffs … was an equivalent of an embargo, and neither side wants that. We do want trade. We want more balance in trade. And I think both sides are committed to achieving that,” he said.
A spokesperson from China’s Commerce Ministry also shared a statement about the matter. As per the spokesperson, the deal was an “important step by both sides to resolve differences through equal-footing dialogue and consultation, laying the groundwork and creating conditions for further bridging gaps and deepening cooperation.”
-
News2 weeks ago
Tesla Cybertruck Range Extender gets canceled
-
Elon Musk5 days ago
Tesla seems to have fixed one of Full Self-Driving’s most annoying features
-
Lifestyle2 weeks ago
Anti-Elon Musk group crushes Tesla Model 3 with Sherman tank–with unexpected results
-
News2 weeks ago
Starlink to launch on United Airlines planes by May 15
-
News2 weeks ago
Tesla Semi gets new adoptee in latest sighting
-
News2 weeks ago
Tesla launches its most inexpensive trim of new Model Y
-
News2 weeks ago
US’ base Tesla Model Y has an edge vs Shanghai and Berlin’s entry-level Model Ys
-
News2 weeks ago
Tesla Cybertruck owners get amazing year-long freebie