Morgan Chase: Investors underestimated potential obstacles to Tesla's merger with SpaceX

On 8 July, Morgan Chase analyst Rajat Gupta stated that, although Tesla and SpaceX merged “it seemed reasonable on paper”, the current speculation surrounding the merger underestimated potential obstacles to trade. Gupta stated that the merger would enable CEO Elon Mask to “consolidate the vision, mission and engineering leadership of the two platforms” and that the common artificial intelligence ambitions of the two companies would be “potential strategic binders”. However, the analyst indicated that potential obstacles included regulatory approval in multiple jurisdictions; governance and voting symmetry; and the perception that “mergers would be SPCX-led rather than reciprocal mergers”. He added: “In general, we will focus on the acquisition currency of SPCX, the regulatory pattern and the voting power of Mask in Tesla as a catalyst for the proximity of potential mergers”. According to Chase Morgan, if a transaction occurred, the most likely structure would be SpaceX-led and fully stocked acquisition of Tesla, and Gupta indicated that this transaction structure could best bridge the valuation gap and avoid large-scale cash expenditures. Gupta rated Tesla neutral, with a target price of $475。