Tesla Inc TSLA CEO Elon Musk’s move to shore up $7.1 billion in new financing from 19 investors including Oracle Corp ORCL founder Larry Ellison to finance his $44 billion take-private deal is a "smart and strategic move" by the world’s richest man, according to Wedbush Securities.
The Tesla Analyst: Wedbush analyst Daniel Ives has maintained an "outperform" rating and a $1,400 price target on the Elon Musk-led company’s shares.
The Tesla Thesis: Ives said Musk’s move to line up investors and lowers Musk’s size of the loan against his Tesla shares to $6.25 billion.
See Also: Cathie Wood Cuts Twitter Stake By 85% As Elon Musk Bulks Up Takeover Financing — Also Trims Tesla
The world’s richest man originally planned to finance the deal with $13 billion in loans from different banks, $21 billion of his own cash and a $12.5 billion loan against his shares in Tesla.
Musk continues to be in talks with existing holders of Twitter, including its co-founder and former CEO Jack Dorsey that could be involved.
The key investors include VC-firm Andreessen Horowitz, billionaire Ellison and Saudi Prince Alwaleed bin Talal among others.
“In this game of high stakes poker the Ellison and impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous,” Ives said.
“This was a smart financial and strategic move by Musk that will be well received across the board and also shows the Twitter deal is now on a glide path to get done by the end of this year which should close the arb spread in the name.”
Price Action: Tesla stock closed 8.3% lower at $873 a share on Thursday.
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