Morgan Stanley Ends Research Coverage of Tesla as the Automaker Mulls Going Private
【Summary】As Tesla CEO Elon Musk explores taking his electric car company private, one of the top Wall Street investment firms is recusing itself from researching Tesla’s financial health.
As Tesla CEO Elon Musk explores taking his electric car company private, one of the top Wall Street investment firms is recusing itself from researching Tesla's financial health. Morgan Stanley announced today that it will no longer rate Tesla for investors.
Morgan Stanley's decision to restrict equity coverage immediately grew speculation that it might be assisting the automaker with its privatization bid. The news boosted Tesla shares to their highest number since August 7, the day when Musk tweeted about taking the electric automaker private.
Tesla shares hit $321.90 after the closing bell on Tuesday, which is nearly 10 percent higher than the company's opening price of $292.38 the day before.
Morgan Stanley becomes the second major financial firm to remove its rating. Last week, Goldman Sachs paired its announcement last week that it was removing its Tesla rating and price target, saying it would be advising Musk on taking Tesla private.
Morgan Stanley hasn't elaborated on what prompted its move. Mary Claire Delaney, a spokeswoman for the bank, and Tesla representatives declined to comment.
Also today, JPMorgan told its clients that funding to take Tesla private "appears to not have been secured" and slashed its December price target for the company's shares by more than a third to $195.
Musk made the surprise announcement on Twitter, saying he was exploring taking Tesla private with a price of $420 per share. He also added to his tweet "funding secured", indicating some interest from outside sources for the multi-billion dollar deal.
In a blog post last week, Musk tried explain his tweet. He wrote that the Saudi Arabia sovereign wealth fund has approached him multiple times over the past two years about taking Tesla private. Musk added that they held several additional meetings with him over the next year to reiterate this interest and to try to move forward with a going private transaction.
After the Saudi fund bought almost 5 percent of Tesla stock on the public markets, Musk claims they reached out to ask for another meeting. That meeting took place on July 31st.
Musk added that the managing director of the fund expressed regret that Tesla had not moved forward previously on a going private transaction with them.
Tesla has been struggling with production issues since July of last year, when the first Model 3's starting rolling off the assembly line. The Model 3 is Tesla's first mass-market car and key to reaching profitability.
The company has burned through cash as it worked to fix what it called "production bottlenecks". Meanwhile, delivered to customers were delayed.
Tesla received received over 450,000 pre-orders for the Model 3 since the company began taking deposits for it in March 2016.
It is not clear if Tesla will secure the billions in funding it needs to go private. However, if the company was able to deliver its new car as promised, its financial situation might be much better than it is today.
Tesla CEO Elon Musk is reportedly prepared to meet with the SEC to discuss his privatization-related tweets.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
China’s Baidu Completes its ‘Apollo Park’, the World’s Largest Autonomous Driving & Intelligent Vehicle Testing Site
Tesla is Cutting its Vehicle Prices in North America & China, Model 3 Now Starts at $37,990 in the U.S.
Continental Signs Agreement With Pioneer to Develop an Integrated High-Performance Vehicle Cockpit
Pony.ai Given Green Light to Carry Passengers in its Robotaxis in China
Just Days After Reopening, Ford Motor Co Temporarily Closes 2 Assembly Plants
CEO of Intel-Owned Mobileye Expects a Big Consolidation of Autonomous Driving Technology
U.S. Automakers Resume Vehicle Production, with New Safety Protocols in Place
Waymo Develops a Machine Learning Model to Predict the Behavior of Other Road Users for its Self-Driving Vehicles
- Is the New Tesla Model Y Ready for the Growing Competition it's up Against?
- Porsche Set to Introduce a More Affordable Taycan With Rear-Wheel Drive
- Documents Submitted by Tesla in China Hint at a Production Increase at the Company’s Shanghai Gigafactory
- Industry Analysis: It’s Now or Never for U.S. Automakers General Motors & Ford to Catch Up to Tesla
- Myle Technologies Launches its Ride-Hailing Service New York City to Compete with Uber & Lyft
- Ford Motor Company is Using Simulation to Design the Passenger Experience for its Future Self-Driving Vehicles
- CEO of Intel-Owned Mobileye Expects a Big Consolidation of Autonomous Driving Technology
- Einride is Hiring the First ‘Remote Autonomous Truck Operator’ in the Industry
- Fiat 500 Returns as Grown-Up, All-Electric City Car
- CVEDIA Wins a 2020 Edison Award for its Synthetic Data Algorithms to Train AI