Barclays upgrades Tesla on SpaceX merger expectations
Barclays turns more bullish on Tesla as investor focus shifts to the possibility of a combination with SpaceX. The bank raises its rating to overweight from equal weight and lifts its price target to $450 from $370, implying 21% upside from Friday's close.
Highlights
- Barclays upgrades Tesla to overweight and raises its price target to $450 from $370, citing expectations of a potential merger with SpaceX.
- Tesla's auto business is projected to resume growth in 2024 after two years of declines, with 2027 upside driven by full self-driving demand and Giga Shanghai exports.
- Tesla's Energy unit is nearly sold out for 2027 due to strong data center demand, with Barclays expecting shipment growth above 50%.
Upgrade reflects merger and growth outlook
As reported by CNBC, Barclays analyst Dan Levy says a potential merger with SpaceX is a key reason behind the bank's upgrade of Tesla to overweight. In a note to clients on Monday, Levy says recent discussion around Tesla has become heavily centered on a possible combination with SpaceX, and that expectations for a premium to Tesla shares could support further gains.Elon Musk says last week that a Tesla-SpaceX merger would be a "good idea" and notes that committees at both companies have been formed to discuss a potential combination. Barclays also raises its price target on Tesla to $450 from $370.
Core businesses add support for shares
Beyond merger expectations, Levy says Tesla's underlying businesses continue to provide upside. He says the automaker's core vehicle business is on track to grow this year after two years of declines, with further upside in 2027 supported by demand tied to full self-driving and rising exports from Giga Shanghai.Levy also says Tesla's Energy business is nearly sold out for 2027 because of strong data center demand, which Barclays believes could support shipment growth of more than 50%. He adds that Tesla's robotaxi operations have seen a sharp inflection in miles driven, increasing confidence that the company can compete with Waymo's fleet.
Among 49 analysts covering Tesla, 25 rate the stock buy or strong buy and 22 rate it hold, according to LSEG data. Tesla shares are down more than 17% year to date.
Our earlier report on SpaceX’s Grok transaction guarantee covered Elon Musk’s pledge that SpaceX would reimburse users if Grok makes financial mistakes during purchases or leaks card details. We noted that the scope of the promise was unclear, but the discussion highlighted growing risks around AI agents handling payments and the question of who bears liability when things go wrong.
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