Reply To: NRG Energy to Buy Vivint Smart Home in $5.8 Billion Deal

#48981
Truman
Participant

VVNT solid Q3,in which it easily beat EPS estimates as average monthly recurring revenue per user increased to an all-time high of $69.76.
Plus, the attrition rate improved by 40 bps to 11.0%, near a record low.

Th economy is what makes this acquisition a risky proposition, especially if NRG’s free cash flow shrinks due to lower electricity demand in a recessionary environment. NRG intends to use excess free cash flow in 2023 to finance the deal and pay down acquisition-related debt.

Although NRG plans to return to its dividend growth policy in 2024, there’s likely some disappointment that the company is deviating from its typical capital allocation strategy as macro-related risks increase.