Morgan Stanley announced that it had dropped coverage for Tesla’s stock. The brokerage firm took a decision to stop the coverage after CEO Elon Musk’s announcement of taking the company private.
Morgan Stanley Exit
Tesla, the electric automaker has been recently on the news repeatedly announcing big moves. A few days ago, CEO Elon Musk announced on Twitter that he is taking Tesla private. While there was the mixed response for this decision from the investor, Morgan Stanley’s exit on equity coverage made a positive impact on Tesla’s stock.
As a result of this decision, Tesla’s stock rating or target price which was initially shown on Morgan Stanley’s website is now removed. Previously Tesla’s stock was rated at ‘equal weight.’ Right after the announcement on Tuesday which was reported by Bloomberg, Tesla’s share price went up.
Tesla, however, refused to comment on Morgan Stanley’s decision. A popular assumption on this decision is that Morgan Stanley might be a part of Tesla’s decision on going private.
Tesla had a price target of $291 by Adam Jonas who is analyst from Morgan Stanley. He went to explain in his last research note on August 6 that the firm gave an equal weight rating to Tesla and this was because the firm supports a near fair value. He also clarified that it was not just an attractive investment given based on a risk adjustment than the average stock which comes under their NA coverage.
Morgan Stanley’s decision to stop providing equity coverage was followed by the exit of Goldman Sachs group happened last week. With big decisions to make in the upcoming days, Elon Musk seems to be working with few advisors. Further clarification on this news was attained upon Mr. Musk’s tweet dating back to August 13. From the tweet, it is inferred that the firms like Silver Lake and Goldman Sachs are acting as advisors. While, legal advice is given by companies such as Lipton, Tolles & Olson, Wachtell, Rosen, Katz, and Munger.