Tesla’s rocky run continues after Morgan Stanley drops coverage
Elon Musk’s bewildering bid to take Tesla Inc. private has taken another turn that’s 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 hasn’t elaborated on what prompted its move. Mary Claire Delaney, a spokeswoman for the bank, and Tesla representatives declined to comment.
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. That’s the day Musk set the effort in motion with his highly controversial initial tweet on the matter.
The stock surged as much as 5.3 per cent and was up 3.9 per cent to $320.30 as of 1:10 p.m. Tuesday in New York.
Morgan Stanley’s Adam Jonas was a longtime bull on the electriccar maker. The analyst, who had the equivalent of a hold rating on Tesla and a price target of $291, last downgraded the stock in May last year, according to data compiled by Bloomberg.
Musk said in his surprise tweet two weeks ago that he was planning to buy out some Tesla investors at $420 a share and had secured funding to do so. The board later said that it hadn’t received any formal offer from Musk, and Saudi Arabia’s sovereign wealth fund is reportedly considering buying a stake in another U.S. electric-car company.