Market Overview

The Timing Of Goldman's Tesla Upgrade Is Proof Bankers Don't Influence Research

The Timing Of Goldman's Tesla Upgrade Is Proof Bankers Don't Influence Research

Wall Street bashers flooded the Internet with outrage over the timing of Goldman Sachs Group Inc (NYSE: GS)’s upgrade of Tesla Motors Inc (NASDAQ: TSLA) this week. Just hours after Goldman upgraded the stock from Neutral to Buy, Tesla announced that Goldman would be teaming with Morgan Stanley (NYSE: MS) on a $2 billion stock offering.

Of course, the higher Tesla’s share price at the time of the offering, the better it is for all parties involved. Thus, the conspiracy theories write themselves.

Or, Is It Just A Coincidence?

According to former Goldman banker Matt Levine, this uncomfortable situation is ironically likely due to Goldman’s strict stance on keeping its bankers and research analysts completely isolated from each other.

“The awkward thing about those procedures is that, if bankers never talk to analysts, you will occasionally get a situation where the analysts are upgrading a company at the same time that the bankers are finalizing an investment banking mandate, and the near-simultaneous announcements are embarrassing all around,” Levine wrote.

Related Link: How Has Elon Musk Been So Successful So Quickly?

Reuters’ Antony Currie echoed Levine’s cries of coincidence.

“In 2016 it is hard to see Goldman, or any other bank, being quite so stupid as to use research this openly to win banking business,” Currie noted.

In fact, the seemingly embarrassing timing of the upgrade could be viewed as proof that Goldman’s system of keeping analysts separate from bankers is working. It’s hard to imagine they would have wanted all this negative publicity.

Tesla’s stock is up 6.3 percent since the upgrade and 1.24 percent on the day.

Disclosure: The author holds no position in the stocks mentioned.

Posted-In: Antony CurrieAnalyst Color Long Ideas Offerings Opinion Movers Media Trading Ideas Best of Benzinga


Related Articles (GS + MS)

View Comments and Join the Discussion!

Brocade Is Facing Multiple Headwinds, Oppenheimer Stays Neutral On Stock

How Big Pharma Uses Charity Programs To Cover Drug Price Hikes