SolarCity Slumps Before Lockup Expires on 82% of Shares

SolarCity Corp. (SCTY), the owner of rooftop solar plants that’s quintupled since its initial public offering, fell the most in almost two weeks before trading restrictions are lifted for 82 percent of its shares.

SolarCity slumped 9.9 percent to $40.77 at the close in New York, the most since May 21. The San Mateo, California-based company’s shares began trading Dec. 13 at $8.

Almost 61.6 million shares are held under trading restrictions and can’t be sold until June 10, according to a SolarCity filing with the Securities & Exchange Commission. That’s about 82 percent of the total shares outstanding, according to data compiled by Bloomberg.

Investors will probably sell a portion of the restricted shares as soon as they are eligible, said Alex Morris, an analyst at Raymond James & Associates in Houston. Other stockholders may start selling this week, on concerns that millions of shares flooding the market next week may drive down the price.

“The floodgates are about to open,” Morris said in an interview today. He has the equivalent of a hold rating on the shares. “The shares have been really frothy on the theory that anything Elon Musk touches turns to gold, but the gains over the past few months just aren’t rational.”

Billionaire Musk, 41, is SolarCity’s chairman and largest shareholder with about 28 percent. He is also chief executive officer of Tesla Motors Inc. (TSLA), the electric car company that’s more than doubled in value this year. SolarCity CEO Lyndon Rive, Musk’s cousin, holds about 3.5 percent of his company.

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.