Market Overview

Could SpaceX Help Finance A Tesla Go-Private Deal? Morgan Stanley Weighs In

Could SpaceX Help Finance A Tesla Go-Private Deal? Morgan Stanley Weighs In
Related TSLA
Taking A Trade Break: Weak Overseas Data Center Stage Despite Solid Retail Sales
Tesla Has 'Apple-Like Consumer Brand' Potential, Wedbush Says In Bullish Initiation
Looking Through 2019 To The 2020s; 4 Major Themes (Seeking Alpha)

On Monday, Elon Musk revealed Saudi Arabia as the mystery backer behind his recently announced deal to take Tesla private at $420 per share. With details about the potential deal still lacking, a Morgan Stanley analyst said SpaceX could play an important role.

The Analyst

Morgan Stanley analyst Adam Jonas reiterated an Equal-Weight rating on Tesla with a $291 price target.  

The Thesis

Tesla and SpaceX will have an increasingly intertwined future over time, Jonas said in a Monday note. (See the analyst's track record here.)

In the near-term, Jonas said there are two ways SpaceX could help Tesla achieve privatization.

First, SpaceX could directly invest in Tesla as part of a strategic partnership, Jonas said. The two companies could mutually benefit from partnerships in areas such as material science, automation, software, testing, manufacturing and data, in the analyst's view. 

Second, Musk’s stake in SpaceX could serve as collateral for financing to take Tesla private. Reuters recently reported that Musk holds a 54-percent ownership stake in SpaceX worth roughly $25 billion. In Musk’s letter to Tesla employees discussing the potential deal, he said he has no intention of merging Tesla and SpaceX, but Jonas said that doesn’t mean Musk won’t leverage his SpaceX ownership stake.

“Given the importance of Elon Musk in designing and executing a potential buyout (and given Elon Musk’s track record of assuming personal financial risk), we think it is entirely reasonable for investors to consider the role of other very large pools of Elon Musk’s personal wealth in the evolving equation surrounding a potential buyout,” Jonas said.

Price Action

Tesla stock was down 0.69 percent at $353.03 at the time of publication Monday and is now down about 6.3 percent since peaking at around $380 immediately following Musk’s initial tweet about going private at $420 per share.

Related Links:

S3 Partners: Tesla Shorts Haven't Gone Anywhere

4 Conditions Morgan Stanley Considers Critical For Tesla's Successful Move Off The Markets

Photo courtesy of SpaceX. 

Latest Ratings for TSLA

Dec 2018WedbushInitiates Coverage OnOutperform
Dec 2018BairdReiteratesOutperform
Dec 2018JefferiesUpgradesHoldBuy

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Adam Jonas Morgan StanleyAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Best of Benzinga


Related Articles (TSLA)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Citron: Twitter Shares Could Hit '$52 Within 52 Weeks'

Bayer Shares Fall After Jury Awards $289M In Roundup Lawsuit