Barclays believes in a Tesla (TSLA) the merger with SpaceX (SPCX) will provide a take-home premium for shareholders as the electric vehicle maker’s core business and robo-taxis gain momentum.
Senior analyst Dan Levy upgraded Tesla from Equal Weight to Overweight and raised his price target from $370 to $450, citing a confluence of positive factors.
Tesla stock jumped 6% on Monday.
394.39 +22.17 (+5.96%)
At 2:42:03 p.m. EDT. Open market.
“We believe Tesla’s core business improvement + inflection in Robotaxi, plus the potential premium of a combination with SPCX (SpaceX), provides an attractive risk/reward for the stock,” Levy wrote.
During SpaceX’s earnings call last week, CEO Elon Musk revealed that the two companies had formed special committees to discuss a deal. He said there were “a lot of benefits to bringing the companies together.”
Musk has long said he wants about 25% of Tesla, up from 20% today. He owns about 48% of SpaceX and holds about 82% of its voting rights through Class B shares with exceptional voting rights.
Levy called Musk’s “desire to consolidate his control” a “crucial element.”
Barclays sees an acquisition of Tesla by SpaceX as the most likely structure. At $450 per share, a 20% premium, SpaceX is expected to offer about 3.1 of its shares per Tesla share. This would leave Musk with approximately 53% of the voting power of the combined company.
Approval requires more than 50% of total shares outstanding and abstentions count as “no” votes. “While we expect a vote on the merger to pass, we do not view it as a surefire endorsement,” Levy wrote. Barclays’ $250 downside scenario assumes no deal will happen.
Beyond the deal, Levy expects fundamentals to improve. Tesla is on track to increase deliveries this year after two consecutive annual declines. Barclays forecasts 1.80 million vehicles in 2026 and 1.92 million in 2027.
Fully autonomous driving (FSD) featured in more than 75% of North American deliveries during the third trimesterup about 20 percentage points from the second quarter. Giga Shanghai’s exports now represent around 25-30% of global volume.
Energy is another positive point. Management said Tesla is almost out of megapacks for 2027 due to high demand from data centers. Barclays expects deployments to increase by at least 50% next year as Megafactory Houston expands.
As of October 18, Tesla’s robo-taxis fleet has traveled approximately 3.1 million unattended miles in 6 cities, up from approximately 400,000 as of mid-July. Weekly miles increased from 70,000 to around 560,000 during this period.
Barclays does not expect robotaxis to be financially significant in the short to medium term. But he says “signs of significant progress in its operational cities could drive the narrative on the stock.”
Pras Subramanian is a senior automotive reporter for Yahoo Finance. You can follow it X and on Instagram.
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