Tesla (NASDAQ: TSLA) shares roared nearly 6% higher on Monday, October 26, closing at $397.27, after Barclays analyst Dan Levy upgraded the electric vehicle giant to Overweight from Equal Weight and raised the bank’s price target to $450 from $370 — implying more than 21% additional upside from the prior week’s close.
The key catalyst behind the upgrade is the growing anticipation of a landmark corporate combination between Tesla and rocket company SpaceX (NASDAQ: SPCX). CEO Elon Musk confirmed last week that both companies have formed independent special committees to explore a potential merger, which one Wall Street analyst suggested could create a combined entity worth nearly $5 trillion — potentially the largest corporate deal in history. Prediction market platform Polymarket puts the probability of an official announcement at 63% by end of 2027.
Barclays’ bullish case also rests on Tesla’s improving fundamentals, including stronger-than-expected vehicle deliveries, adjusted EPS of $0.48, and free cash flow of $1.53 billion. Meanwhile, smaller EV rivals felt the divergence acutely: Lucid Group fell 4% to $3.38 and Rivian Automotive slipped 2% to $11.64 during Monday’s session. No merger deal has been officially confirmed, and shareholders at both companies would need to approve any final transaction.
Source: CNBC – Buy Tesla Ahead of Potential SpaceX Merger, Says Barclays