Pro Analysis

Breakingviews: Elon Musk's $400 million valuation error

SpaceX CEO Elon Musk
Mario Anzuoni | Reuters
SpaceX CEO Elon Musk

Some simple deal math has stumped Elon Musk. Lazard spotted a $400 million error in valuation calculations SolarCity used in its $2.6 billion sale to Tesla. Musk, who is chairman of both companies, orchestrated the merger, one fraught with controversy over governance, finances and industrial logic. These sorts of numbers aren't exactly rocket science.

Chalk up the mistake to a modeling error. Amid the data dump SolarCity sent to its investment bankers was a double-counting of how much debt the company reckoned it might have in the future, according to merger documents submitted to securities regulators on Wednesday. Lazard discovered the problem in mid-August, shortly after the transaction was announced and SolarCity released second-quarter results.