SolarCity (SCTY) has been on fire. Flame out or afterburners now? I discuss in this free video…
Discussed in this article: SolarCity Corporation ( $SCTY )
I want to look at SolarCity ( NASDAQ:SCTY ). I’m looking at this stock and there are a couple things I just wanted to point out to you: first have all the company announces earnings in early November, November 6th. This is a company that’s run by Elon Musk, Mr.Tesla so that’s a good thing the market likes it. Whatever the report is when they announce earnings I’ll tell you this, it’s going to move this stock and its going to move it a lot.
But between now and then, here’s my suspicion of what happens. It seems to me like this is an intraday reversal, it’s probably going to can lead to a little backing and filling, there’s no particular consolidation or I should say catalyst for this stock coming down, not today, right? But here’s the point that I wanted to make; there’s no real catalyst for the stock to move higher between here and earnings, but there is maybe kind of a catalyst for this stock to move lower.
This is the deal, the company is issuing a secondary, they got a secondary stock offering of 3.4 million shares at a price of 46.54, and that’s down here. Now that sale is completed on the 21st, that’s going to be completed next week, in fact next Monday. So the point is, if you’ve got all of these shares hitting the market, hitting the investors accounts, and the price is 46.50, how much do you want to bet that some of those guys are going to decide to take some of this profit?
So I think that you’re likely to get SolarCity ( NASDAQ:SCTY ) at a lower level over the next several days. I can’t predict this stuff, sometimes secondary offerings occur and the stock just keeps going higher, but here, with the kind of move the company has had I would suggest that you want at least look at this, you’re probably going to see some liquidity, some additional liquidity in the market on Tuesday and that will push the stock lower.
I look at this, and I look intraday, and you can see what happened. The first thing in the morning the stock ran up, started trickling sideways, and then drifted lower. You might say, “Well low, maybe that’s market related.” No, this is what the S&P 500 looked like, it just kept going, we’ll look at the QQQ’s, just kept going. Again, SolarCity ( NASDAQ:SCTY ), no, gapped up and didn’t participate. So this is a stock that in my view is probably at a short-term peak, you’re going to want to be lightening up on your position.