On Tesla’s path to privatization, Morgan Stanley halts equity coverage of electric automaker
Morgan Stanley is no longer providing equity coverage on Tesla’s stock, the second firm to drop its stock rating on the electric automaker since CEO Elon Musk announced plans via Twitter to take the company private.
Tesla declined to comment. Morgan Stanley could not be reached for comment to explain why it dropped Tesla. However, some speculate that the brokerage firm could be playing some role in Tesla’s plan to become a private company.
Morgan Stanley’s website no longer shows a stock rating or target price on Tesla. Tesla stock was previously rated at “equal weight.” The move, which was reported by Bloomberg, caused Tesla shares to rise Tuesday. Shares closed at $321.90, about 3.6 percent higher than its opening price.
Morgan Stanley analyst Adam Jonas, a longtime bull of Tesla, had a $291 price target on the company. In his last research note on August 7, Jonas explained Morgan Stanley placed an equal weight rating on the company because it supports a near fair value and “not a more attractive investment on a risk-adjusted basis than the average stock under our NA coverage.”
Last week, Goldman Sachs Group dropped its Tesla rating and price target, although it gave an explanation for the move. The company is stepping in to advise Musk and the Tesla board on taking the company private.
Musk’s tweet August 13 provided more details, including that the company is working with Silver Lake and Goldman Sachs as advisors. The company has hired Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisors.
Musk first floated the idea of taking Tesla private at $420 a share on August 7 via a tweet that prompted the U.S. Securities and Exchange Commission to investigate.
