SolarCity Corp shares boomed on Thursday’s market as solar traders appear confused about the direction in which the market is going. At time of writing shares in the firm, which counts Elon Musk among its backers, were selling for $36.08, up 5.05 percent for the day’s trading so far.
There was no clear reason for the jump in the value of the firm, but it is part of a momentum push that has been happening in recent days. SolarCity stock was selling for less than $29 on Monday’s market, but have spiked since. The firm has been the target of Jim Chanos, a major short seller, and his weight has certainly affected the stock in the last few months. Mr. Chanos says that SolarCity is just another Sub Prime lender, and the basis of it’s loans, solar panels, doesn’t make economic sense.
SolarCity surges despite Chanos weight
Shares in SolarCity Corp have not recovered to anything near the levels they sat at before Mr. Chanos made those comments. Back in August SolarCity stock was selling for more than $55, but a slump in the market coupled with weight from short sellers has pushed the value of the firm down massively.
That makes the surge in the value of the stock this week all the more interesting. SolarCity stock hasn’t traded for more than $35 since the firm unveiled a bleak growth outlook along with its results at the end of October. That weaker growth outlook appears to have been taken by some as confirmation of Mr. Chanos’ theory about the firm. The amount of SolarCity stock held short has spiked since the middle of October.
The amount of SolarCity shares held short sat at 26,062,739 on October 15, but jumped to 29,460,059 by November 13, the most recent date for which we have data. At the same time the average daily volume of trading in SolarCity stock has more than doubled.
Chanos, and any short seller who borrowed SolarCity stock before November will still be happy with the numbers, but the rising tide will leave many looking for answers that aren’t all that easy to come by.
SolarCity may be changing
The massive spike in volume of trading for SolarCity Corp appears would lend to the theory that the big rise in the value of the stock in recent days is all about momentum, and traders simply trying to jump onto what they see as a rising boat. Analysts from Zacks.com reckon it might be about more than that, however, and that the complex options market has a part to play.
According to research by the firm, the spike in the value of SolarCity stock is down to news that options trader Jon Najarian had taken an interest in the firm after seeing some unusual activity.
Last week SolarCity revealed that its CFO Brad Buss would retire whiles its COO Tanguy Serra would take up the job of President. Philip Shen of Roth Capital said that the firm’s recent change of management could help to propel the value of the firm’s shares higher. In his view, the “management transition stems from the recent strategic pivot.” He has a $50 price target on SolarCity Corp stock.
It appears that SolarCity is changing the way it does business, and the stock market is responding positively. It remains to be seen whether a real shift is responsible for the rise, or whether it’s a pure momentum move. One thing is for certain, Jim Chanos and the rest of those shorting the firm will be keeping their eyes peeled.