From today’s WSJ (How Government is Making Solar Billionaires):
Welcome to SolarCity, SCTY -0.59% the latest booming green company that has never recorded a profit. The startup’s stock price has soared by 600% since its IPO last Decemberâ€”it closed on Monday at $57 a shareâ€”and spiked after the company announced a couple of weeks ago that it expects business to grow by 70% to 90% next year. Yet the company, based in San Mateo, Calif., and specializing in deploying rooftop panels, ended the first six months this year $61 million in the red.
Ordinarily, that sort of number might disconcert investors. But SolarCity’s business model is powered by government subsidies, which also fueled the 500% stock run-up and turn to profit this year of the electric-car maker Tesla. Steering both companies is Elon Musk.
In addition to being the chairman of SolarCity and CEO of Tesla, Mr. Musk is the largest shareholder in both companies. The increase in their stock prices has raised his net worth by more than $5 billion over the past year.
Isn’t that lovely?
Yes, I am aware that the government also helps other industries. The point is the government really should get out of all business creation and promotion. The government should not be deciding who is or is not successful. If your idea cannot succeed in the market place on its own, then you need a different idea. Mr. Musk has the U.S. taxpayers to thank for his wealth.
Discuss among yourselves while I go paint the master bedroom…
PS – If you can’t read the link, email me (JLP – at – AllFinancialMatters.com) and I’ll get you a copy.