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Wall Street’s reaction to Tesla’s proposed buyout of SolarCity

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9 years ago

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Since the proposed deal of Tesla to acquire SolarCity in a stock exchange with no cash involved was announced, a flurry of reports flooded the Internet, pretty much with many Wall Street reporters and pundits decrying the proposed deal as “crazy”, “not a no-brainer”, an “eclipse”, “plot of video game”, “sounds nuts”, but also with a few noting that Elon was “creating a clean energy empire” or “offering a one-stop shop.”

At the same time, the after-market reaction was swift: TSLA stock plunged 12% and SCTY stock rose 18%. This action was predictable. Since the Tesla – SolarCity deal is an exchange of stock, no cash deal, when adding about 12 million new shares, an 8% dilution of TSLA stock will occur.  This dilution covers the majority of TSLA stock drop. Another negative factor is going from $2 billion of TSLA cash flow losses to $4.8 billion of cash flow losses of the combined companies, an increase of over 130%. Thirdly, TSLA debt will double after the deal. So a 12% drop should not leave anyone surprised.

Similarly, the assured “premium of approximately 21% to 30% over the closing price of SolarCity’s shares,” as stated in the letter to Lyndon Rive, pretty much matches the 29 percent rise of SCTY in extended trading, also matching SolarCity’s average 12-month price target of  $29.82 among analysts surveyed by Bloomberg. So the stock action of both TSLA and SCTY was completely predictable.

Looking at the reporters / pundits comments, Bloomberg was the outlet with the most reports, 4 in all.

Tom Randell of Bloomberg reported in “Musk Buys Musk: Tesla’s SolarCity Deal by the Numbers”, that “ either Musk is bailing out a beleaguered company that’s run by his cousin, Lyndon Rive, or he’s consolidating a clean-energy empire at rock-bottom prices. Or both.”

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Tom is one of the most bullish on the deal, saying that “It allows Musk to integrate the three-legged stool of clean energy in a way the world has never seen: electric cars, solar power, and grid battery storage all in one place. If so inclined, you could provide for all of your energy needs without ever leaving the Tesla family.”

Chris Martin of Bloomberg reported in “In SolarCity Bid, Tesla’s Musk Targets Customer Who Wants It All” that “Tesla Motors Inc.’s offer to buy SolarCity Corp. would combine two already deeply linked companies to offer clean energy enthusiasts a one-stop shop” and  that “the challenge I see around this for both companies is that they’re kind of strapped for cash,” quoting Hugh Bromley, an analyst for Bloomberg New Energy Finance in New York. “They both need cash injections to fuel their growth.”

Dana Hull of Bloomberg reported in “Tesla Takeover of SolarCity Not a ‘No-Brainer’ for Investors” that “Oppenheimer & Co. analysts including Colin Rusch downgraded Tesla to perform from outperform in a research note published late Tuesday, saying they expect “a robust shareholder fight over this acquisition centered on corporate governance” and that “Credit Suisse Group AG analysts including Patrick Jobin said in a separate note that they expect “resistance from Tesla shareholders” and warned of “many corporate governance challenges.”

Lastly Liam Denning of Bloomberg reported in  “Tesla’s SolarCity Eclipse” that “the timing is odd, to say the least. Tesla’s all-stock offer is pitched as providing SolarCity’s investors with a premium of 21 to 30 percent, based on a proposed valuation band that’s subject to completing due diligence (itself an unusual proposal)” and “Tesla is jumping in as SolarCity’s entire business model is being openly questioned amid rapid cash burn and stubbornly high overheads.”

Ominously he also reported that “Tuesday evening, not long after news of the offer broke, Tesla’s valuation had dropped by $3.8 billion in after-hours trading — 1.8 times the entire market capitalization of SolarCity before the announcement. Awkward, much?”

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Ary Levi of CNBC reported in “Elon buying Elon: Sounds a lot like the plot of a video game”  that this was “potential deal in which one of the country’s best-known tech billionaires will effectively transfer cash from one of his pockets to another – sounds nuts.” and joked about that “even if we all exist in a simulation, as Musk suggested at the Code Conference this month, he still has to obey securities laws.”

Christine Wang of CNBC reported in “Bid for SolarCity may mean Elon Musk doesn’t see Tesla as an auto company” quoting trader Karen Finerman saying that “Tesla’s offer, valued up to $28.50 per share, doesn’t seem like a gigantic price for a company that was trading significantly higher not that long ago.”

Charley Grant and Spencer Jakab of The Wall Street Journal reported in “Tesla Buying SolarCity: This Deal Defies Common Sense” that “just a day after Tesla boss Elon Musk made the odd boast that one of its cars “floats well enough to turn into a boat,” he did something even odder. Tesla’s bid for solar panel installation firm SolarCity on Tuesday afternoon is the sort of move that, even for the most Panglossian Silicon Valley investor, stretches the bounds of industrial logic” and that “as Mr. Musk warned about his amphibious wonder car, such harebrained schemes can only float “for short periods of time.”

Mike Ramsey, Lynn Cook and Mike Spector of The Wall Street Journal reported in “Tesla Offers to Acquire SolarCity”, quoting Elon saying that “the acquisition aims to create a company employing nearly 30,000 people with all products renamed “Tesla” that will package electric cars, batteries and solar panels for customers.” They also warned that “it would also add to the growing complexity and vertical integration of Tesla and add an unprofitable operation to its already-strained finances.”

Nichola Groom and Paul Lienert of Reuters reported in “Tesla offers $2.8 billion for SolarCity in ‘no brainer’ deal for Musk”, quoting Elon saying that  that “instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit. It’s an obvious thing to do.” But they noticed that “Tesla investors punished the company’s shares, however.”

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Elon Musk

Twitter co-founder Jack Dorsey endorses Elon Musk Tesla pay package

Dorsey framed the pay package as an engineering and governance crossroads for Tesla.

Published

3 days ago

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November 6, 2025

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Twitter co-founder and Square CEO Jack Dorsey has publicly backed Elon Musk’s leadership ahead of Tesla’s pivotal shareholder vote, which is expected to be decided later today at the company’s 2025 annual meeting. 

Dorsey framed the pay package as an engineering and governance crossroads for Tesla.

Dorsey’s public nod framed as an engineering defense of Musk

In a post on X, Dorsey weighed in on Tesla’s post about being in a “critical inflection point.” As per the Twitter-co-founder, the vote on Musk’s 2025 performance award is not about compensation. Instead, it’s about ensuring the path for the company’s engineering in the coming years. 

“This is not about compensation. it’s about ensuring a principled (and exciting!) engineering approach to the company’s future,” Dorsey wrote on his post, later stating that users of Cash app with TSLA shares would be able to vote for the CEO’s proposed 2025 performance award. 

Elon Musk appreciated Dorsey’s endorsement, responding to the Twitter co-founder’s post with a heart emoji. Musk has been pretty thankful for the support for is fellow tech executives, also thanking Michael Dell recently, who also advocated for its proposed 2025 performance award.

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Musk’s support

While Elon Musk’s 2025 performance award has received opposition from proxy advisors such as Glass Lewis and ISS, it has received quite a lot of support from longtime bulls such as ARK Invest, and, more recently, Schwab Asset Management following calls from TSLA retail shareholders. 

“Schwab Asset Management’s approach to voting on proxy matters is thorough and deliberate. We utilize a structured process that focuses on protecting and promoting shareholder value. We apply our own internal guidelines and do not rely on recommendations from Glass Lewis or ISS. In accordance with this process, Schwab Asset Management intends to vote in favor of the 2025 CEO performance award proposal. We firmly believe that supporting this proposal aligns both management and shareholder interests, ensuring the best outcome for all parties involved,” Charles Schwab told Teslarati.

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Elon Musk

Tesla Robotaxi and autonomy dreams lean on shareholders: Wedbush

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4 days ago

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November 5, 2025

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Credit: Tesla Europe & Middle East/X

Tesla’s dreams of developing a Robotaxi suite that utilizes a fully autonomous platform developed by the company’s top-tier talent now lean on shareholders and perhaps the most crucial vote in its history.

That’s what Dan Ives of Wedbush said in a new note to investors on Wednesday. As the Annual Shareholders’ Meeting is now just one day away, investors are down to their final chance to vote for or against Elon Musk’s new compensation plan.

Ives wrote that, while the company has made its intentions clear, wanting to maintain Musk, pay him accordingly, and give him the voting power he has long wanted, ultimately, the responsibility falls on investors.

As many retail shareholders have pushed for people to vote for Musk’s compensation package, there are a handful of large-scale funds and firms that have decided to go in another direction. Bullish Wall Street firms, Wedbush being one of them, believe it is crucial for Tesla to maintain Musk.

The vote could have major implications on whether Tesla launches an autonomous Robotaxi suite in the near future, Ives says:

“Getting Musk’s pay package approved tomorrow at the highly anticipated meeting will be a big step towards advancing Tesla’s future goals with the autonomous and Robotaxi roadmap ahead.”

While some investors are convinced the company is ready to go in a different direction simply based on Musk’s political involvement over the past year, many investors are under the impression that the development of Tesla’s autonomy suite, as well as its prowess in the EV sector, would fall if Elon were not at the helm.

Tesla’s Board of Directors has already stated that they have received confirmation that Musk’s political involvement would wind down in a timely manner. Moving forward, his focus will not veer from the mission of any of his companies; at least that’s what can be gathered from some of the Board’s communications over the past month.

Musk’s new compensation package is incentivized by performance metrics and will require him to achieve a handful of lofty tranches. He will not get paid unless he drives shareholder value, which is something many skeptics tend to leave out.

Ives continues:

“This new incentive-driven pay package for Musk would also provide an additional 423 million shares of common stock (~12% of shares), which would increase his ownership of Tesla up to ~25% voting power, which we believe was critical to keep Musk at the helm to lead Tesla through the most critical time in the company’s history. We believe this was the smart move by the Board to lay out these incentives/pay package at this key time as the biggest asset for Tesla is Musk…and with the AI Revolution, this is a crucial time for Tesla ahead with autonomous and robotics front and center.”

Wedbush maintained its Outperform rating and $600 price target on shares.

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Elon Musk

UPDATE: Tesla investors push Charles Schwab for Musk comp plan clarification

Published

5 days ago

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November 4, 2025

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tesla cybertruck elon musk
Tesla CEO Elon Musk unveils futuristic Cybertruck in Los Angeles, Nov. 21, 2019 (Photo: Teslarati)

Update: 4:00 p.m. EDT – Charles Schwab has reached out to TESLARATI with the following statement, clarifying that it plans to vote FOR Musk’s compensation package:

“Schwab Asset Management’s approach to voting on proxy matters is thorough and deliberate. We utilize a structured process that focuses on protecting and promoting shareholder value. We apply our own internal guidelines and do not rely on recommendations from Glass Lewis or ISS. In accordance with this process, Schwab Asset Management intends to vote in favor of the 2025 CEO performance award proposal. We firmly believe that supporting this proposal aligns both management and shareholder interests, ensuring the best outcome for all parties involved.”
There have also been updates to the headline and various paragraphs to reflect this as well as accuracy.

Tesla investors are pushing Charles Schwab for clarification after it was expected to vote against CEO Elon Musk’s pay package.

Several high-profile Tesla influencers are speaking out against Charles Schwab, saying its decision to vote against the plan that would retain Musk as CEO and give him potentially more voting power if he can achieve the tranches set by the company’s Board of Directors.

The Tesla community appeared to see that Schwab is one firm that tends to vote against Musk’s compensation plans, as they also voted against the CEO’s 2018 pay package, which was passed by shareholders but then denied by a Delaware Chancery Court.

Schwab’s move was recognized by investors within the Tesla community and now they are speaking out about it:

At least six of Charles Schwab’s ETFs were expected to vote against Tesla’s Board recommendation to support the compensation plan for Musk. The six ETFs represent around 7 million Tesla $TSLA shares.

Jason DeBolt, an all-in Tesla shareholder, summarized the firm’s decision really well:

“As a custodian of ETF shares, your fiduciary duty is to vote in shareholders’ best interests. For a board that has delivered extraordinary returns, voting against their recommendations doesn’t align with retail investors, Tesla employees, or the leadership we invested to support. If Schwab’s proxy voting policies don’t reflect shareholder interests, my followers and I will move our collective tens of millions in $TSLA shares (or possibly hundreds of millions) to a broker that does, via account transfer as soon as this week.”
Tesla shareholders will vote on Musk’s pay package on Thursday at the Annual Shareholders Meeting in Austin, Texas.

It seems more likely than not that it will pass, but investors have made it clear they want a decisive victory, as it could clear the path for any issues with shareholder lawsuits in the future, as it did with Musk’s past pay package.

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