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.

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:
  • Earlier, Tesla Go-Private Effort in Hands of Trio Chosen to Mull Musk Bid
  • Earlier, Musk Says He’s Tapped Goldman, Silver Lake on Tesla Bid Plan
  • Aug. 13, Musk Says ‘Funding Secured’ Claim Sparked by Saudi Meetings

--With assistance from Gabrielle Coppola.

To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Richard Richtmyer, Craig Trudell

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