Exiting Tesla Now May Beat Risking a Failed Deal, Barclays Says

(Bloomberg) -- Investors may be better off cashing out of Tesla Inc. instead of risking a deal to take the company private falling through, Barclays analyst Brian Johnson writes in a research note.

Exiting Tesla Now May Beat Risking a Failed Deal, Barclays Says

Johnson, who rates Tesla the equivalent of sell with a $210 price target, said investors should either dump the stock now at current prices and avoid potential litigation risk, or take the $420 a share that Elon Musk has said he will offer to buy them out.

Musk’s latest blog post “made it clear -– as we suspected last week -– that any go-private transaction still had numerous hurdles in front of it,” Johnson wrote Tuesday.

  • Says institutional investors need to weigh the illiquidity and funding disadvantages of private stakes with the benefits of management focus; they may also need to consider the lack of transparency and eventual liquidity inherent in a private stake
  • Tesla is not the only avenue for sovereign wealth funds to diversify away from oil; Johnson says the the growing electric vehicle market has numerous other public and private investment opportunities that provide a hedge against the “peak oil” argument
  • Tesla has 11 buys, 11 holds, 11 sells; avg price target $327: Bloomberg data
  • NOTES:

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