The Power of Elon Musk

 | Jun 18, 2014 | 2:30 PM EDT
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Reuters had a good headline on news that SolarCity (SCTY) had bought an upstate New York solar panel manufacturer: "SolarCity's stock jumps $900 million on news it bought a company for $350 million."

That sentence -- and yesterday's and today's move up in the stock price of SolarCity -- shows the power of Elon Musk. His magic has been well-documented in the rise of Tesla (TSLA). However, he is mentioned less when it comes to SolarCity, which is run by his cousin, Lyndon Rive. But Musk's fingerprints are all over SolarCity. He's a major investor in SolarCity and its chairman.

Yesterday, SolarCity announced it was buying Silevo to integrate vertically into the manufacturing of the solar panels that it puts on consumers' homes. The market liked the move right away as SolarCity's stock price rose.

Up until now (and in the future), SolarCity has relied on a variety of solar panel providers for the products it installs. A big trade war is looming in the solar space between China and the U.S. There's a risk that if it doesn't get resolved, any solar panels imported to the U.S. from China will have 30% tariffs tacked to them. With this move, SolarCity is better able to control its own destiny. If worse comes to worst, it can just focus on its own supply chain for panels.

But it wasn't until the conference call started at yesterday morning that SolarCity's stock price really started to move. A big reason was that Musk was on the call. He didn't lead it and certainly didn't dominate it, but he spoke a lot and what he said sounded very bullish. He discussed how Silevo's existing solar farm had capability to produce 1 GhW of solar power but could potentially generate much more. He discussed how the Silevo panels would take up less room on roofs to generate the same power. He also discussed how the only stocks he owned are Tesla and SolarCity.

When the call ended, analysts were buzzing, talking up the acquisition and how it could help lower SolarCity's overall costs. When the news got out, the stock price started moving up strongly and didn't stop all day. There is something magical about Musk's comments these days. It is very Steve Jobs-like. It's remarkable to watch.

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