SolarCity Corp (SCTY), Tesla Motors Inc (TSLA): The Musk Bubble?

SolarCity Corp (NASDAQ:SCTY) was co-founded by a Musk cousin, named Lyndon Rive, and works at the more-profitable end of the solar energy market, selling, financing, and installing solar panels.

There are many companies in this part of the market – SunRun and RealGoods Solar among them. But SolarCity Corp (NASDAQ:SCTY) was early to the game of solar leasing, and was quick to provide financing.

In a SolarCity Corp (NASDAQ:SCTY) solar lease, you don’t actually own the panels on top of your house. Instead, you buy them over time with power generated by the panels. With this financing arrangement, the installer holds an enormous amount of debt, which only comes back over time.

In this early stage of the game it’s the ability to do deals that matters. Timing also matters a lot. SolarCity Corp (NASDAQ:SCTY) went public late last year, at the bottom of the industry’s cycle, and shares are up about 200% in that time. It’s a $500 million finance line from Goldman Sachs that has really sparked the stock to new highs.

For the first quarter of 2013 SolarCity Corp (NASDAQ:SCTY) reported a loss of $31 million on sales of $30 million. The key is the balance sheet, which was flush at the end of last year with $160 million in cash, and a reasonable debt-equity ratio under 25%. It’s also cash flow positive on an operating basis.

What investors are buying with SolarCity is growth and stability, in a market where both are in short supply. As the cost of solar power plunges below that of other forms of grid energy – and that has already happened in many places – that growth can be expected to continue, with SolarCity Corp (NASDAQ:SCTY) having crossed the chasm to the profitable side of the business.

What Next? SpaceX

Musk’s best deal may be yet to come. That would be Space Exploration Technologies, known as SpaceX, which has managed to lift a robotic space rocket to the International Space Station, and get it back.

The Fool’s Tim Byers thinks it’s now the right time for SpaceX to go public. It’s chief rival is the untied Launch Alliance, which was started by Boeing, Lockheed, and Russia’s Soyuz.

When you’re betting on Elon Musk, however, understand that you’re speculating, that he’s always going to run things close to the edge financially, but that he has, so far, managed to find the best operating teams in every business he’s worked in.

The article In Musk We Trust? originally appeared on Fool.com is written by Dana Blankenhorn.

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