Elon Musk’s bewildering bid to take Tesla Inc private has taken another turn that has spurred trading tumult, with Morgan Stanley becoming the second firm to suspend coverage of the electric-car maker’s stock.
Whereas Goldman Sachs Group Inc paired its announcement last week that it was removing its Tesla rating and price target with the disclosure of a reason why — that it would be advising Musk — Morgan Stanley has not elaborated on what prompted its move.
Morgan Stanley’s decision to restrict coverage spurred speculation that it could be playing a role in taking the privatization bid forward and helped spur the biggest intraday gain for Tesla shares since Aug. 7.
Photo: AFP
That was the day Musk set the effort in motion with his controversial initial tweet on the matter.
Musk said in his surprise tweet two weeks ago that he was planning to buy out some Tesla investors at US$420 a share and had secured funding to do so.
The board later said that it had not received any formal offer from Musk, and Saudi Arabia’s sovereign wealth fund — the investor that Musk has described as a lynchpin of his plan to take Tesla private — is reportedly considering buying a stake in another US electric-car company.
Despite the stock rally, the confusion swirling around Musk’s efforts have started eroding the faith even of long-time bulls.
Earlier on Tuesday, Consumer Edge analyst James Albertine cut his rating on Tesla to equal-weight, from overweight, citing uncertain outcomes from regulatory inquiries and potential penalties, as well as Musk’s ability to keep serving in such a broad capacity.
This is his first downgrade of the stock since beginning coverage in July 2016.
“It is becoming more clear that he may be stretched too thin and could benefit from a CEO and/or COO [chief operating office] hire,” Albertine wrote.
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