Barclays has flipped to bullish on Tesla. Analyst Dan Levy upgraded the stock to Overweight from Equal Weight on Monday, Oct. 26 and raised his price target to $450 from $370, about 21% above Friday’s close. His headline reason is the one everyone has been talking about since last week: a likely combination with SpaceX. But he spent just as much of the note on cars, batteries and robotaxis.
“The recent dialogue around Tesla has skewed heavily to a potential combination with SPCX,” Levy wrote, as quoted by CNBC. “With a combination heavily expected, and with expectation for some premium to TSLA stock, we believe this should drive upside for the stock.” Tesla shares rose about 2% in premarket trading to around $380, TradingKey reported, ahead of the 9:30 AM ET / 6:30 AM PT open (10:30 PM JST).
The merger math
Musk said on SpaceX’s earnings call last week that both companies had formed special committees to discuss a deal and that there was “a lot of merit to combining the companies.” Levy now treats a combination as close to settled and calls it “a key part of the Tesla bull case,” according to Investing.com. His argument has two sides. A takeover premium gives the stock upside, and investors are unlikely to short Tesla while a deal is pending, which limits the downside.
The note also runs the ownership numbers. Musk has said he wants about 25% of Tesla, up from roughly 20% today. He owns roughly 48% of SpaceX with 82% of the voting power, so a SpaceX acquisition of Tesla would carry him past that threshold. Using Barclays’ $450 target and SpaceX’s current share price, the bank estimates Musk could end up with about 53% of the combined company’s voting power. Any deal would still need a shareholder vote, Levy noted, per The Fly via TipRanks.
Not just M&A
Levy said the story shouldn’t rest on a merger alone, and listed four things from the third-quarter results that changed his mind:
- Cars are growing again. The auto business is on track to grow this year after two years of declines, and 2027 should bring more, driven by FSD demand and “rising exports from Giga Shanghai.”
- Energy is nearly sold out. Tesla said its energy business is “nearly sold out for 2027” thanks to data-center demand, which Barclays thinks could support more than 50% growth in storage shipments.
- FSD take rates are high. FSD adoption topped 75% on newly purchased North American vehicles in the third quarter.
- Robotaxi miles are taking off. Levy flagged “a sharp inflection in Robotaxi miles driven” in recent weeks, which gives him more confidence Tesla can compete with Waymo’s fleet.
That last point lines up with what’s happening on the ground in Texas. Tesla’s robotaxi roster there has passed 900 vehicles, and over the weekend more than 50 Cybercabs were ferrying fans to the Formula 1 race in Austin. Not a Tesla App’s earnings-call recap and Drive Tesla Canada’s coverage of the latest Cybercab rider features fill in the operating details.
The Street is still split
Barclays isn’t alone. On Sunday, Canaccord Genuity’s George Gianarikas said investors who read the earnings call as “subdued” were “flatly wrong,” calling it “one of the most unapologetically bullish Tesla calls in many a moon.” He reiterated a $442 target, as Sawyer Merritt shared on X. Still, of the 49 analysts covering Tesla, 25 rate it a buy or strong buy and 22 a hold, according to LSEG data cited by CNBC. The stock is down more than 17% this year.
For Japan, the Giga Shanghai line matters more than it looks. The Model 3 and Model Y sold here are built in Shanghai, and Tesla just reported a record quarter in Japan. If Barclays is right that Shanghai exports keep rising in 2027, Japanese buyers are part of the reason.
Sources: CNBC, Investing.com, The Fly / TipRanks, TradingKey, Sawyer Merritt on X, Not a Tesla App, Drive Tesla Canada. This article is news, not investment advice.
— The EVX News team
Featured image: One Churchill Place, Barclays’ global headquarters at Canary Wharf, London. Photo: Acabashi, via Wikimedia Commons, licensed under CC BY-SA 4.0 (cropped).
