Could SpaceX Help Finance A Tesla Go-Private Deal? Morgan Stanley Weighs In

On Monday, Elon Musk revealed Saudi Arabia as the mystery backer behind his recently announced deal to take Tesla private at $420 per share. With details about the potential deal still lacking, a Morgan Stanley analyst said SpaceX could play an important role.

The Analyst

Morgan Stanley analyst Adam Jonas reiterated an Equal-Weight rating on Tesla with a $291 price target.  

The Thesis

Tesla and SpaceX will have an increasingly intertwined future over time, Jonas said in a Monday note. (See the analyst's track record here.)

In the near-term, Jonas said there are two ways SpaceX could help Tesla achieve privatization.

First, SpaceX could directly invest in Tesla as part of a strategic partnership, Jonas said. The two companies could mutually benefit from partnerships in areas such as material science, automation, software, testing, manufacturing and data, in the analyst's view. 

Second, Musk’s stake in SpaceX could serve as collateral for financing to take Tesla private. Reuters recently reported that Musk holds a 54-percent ownership stake in SpaceX worth roughly $25 billion. In Musk’s letter to Tesla employees discussing the potential deal, he said he has no intention of merging Tesla and SpaceX, but Jonas said that doesn’t mean Musk won’t leverage his SpaceX ownership stake.

“Given the importance of Elon Musk in designing and executing a potential buyout (and given Elon Musk’s track record of assuming personal financial risk), we think it is entirely reasonable for investors to consider the role of other very large pools of Elon Musk’s personal wealth in the evolving equation surrounding a potential buyout,” Jonas said.

Price Action

Tesla stock was down 0.69 percent at $353.03 at the time of publication Monday and is now down about 6.3 percent since peaking at around $380 immediately following Musk’s initial tweet about going private at $420 per share.

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Photo courtesy of SpaceX.