Wells Fargo Sees Potential for Musk Sell Tesla (TSLA) Shares to Fund Twitter (TWTR) Bid
Wells Fargo analyst Colin M. Langan reiterated an Equal Weight rating and $910.00 price target on Tesla (NASDAQ: TSLA).
The analyst comments "This morning TSLA CEO, Elon Musk, launched a hostile takeover bid of Twitter for $54.20 per share, valuing the company at $43B. The offer is non-binding and contingent on several factors, including government approvals, various due diligence requirements, and the completion of anticipated financing. If the deal is successful, there are two concerns from a TSLA shareholder perspective. One, TSLA is currently in the early days of ramping two factories, Austin & Berlin, which will likely double its global capacity. Running Twitter would be a possible distraction for a CEO that already has a full plate. Two, the takeover financing terms are unclear. Musk will need $39B in financing to complete the deal. Elon's most liquid assets would be his TSLA shares valued at $170B. Forbes estimated his total net worth at $273.6B, mostly comprised of TSLA and SpaceX (estimated at $74B). Therefore, there is a risk if he decides to sell more TSLA shares to fund the takeover, which could put pressure on the stock. Note, the contingency on getting anticipated financing implies that at least some portion will come from outside sources."
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Shares of Tesla closed at $1022.37 yesterday.