tesla-space x merger. from dec. but still relevant
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Posted On: 05/11/2018 12:25:11 PM
tesla-space x merger. from dec. but still relevant.
SpaceX Is Just the Thing to Help Tesla Stock
Morgan Stanley says a Tesla-SpaceX merger makes sense.
By Wayne Duggan, Contributor |Dec. 6, 2017, at 7:52 a.m.
SpaceX Is Just the Thing to Help Tesla Stock
IN SPACE - APRIl 10: (EDITORIAL USE ONLY) (NO SALES) This handout image supplied by the European Space Agency (ESA), shows a view of The Palms, Dubai as the SpaceX Dragon spacecraft psses below, in an image taken by ESA astronaut Tim Peake from the International Space Station on April 10, 2016. ESA astronaut Tim Peake is performing more than 30 scientific experiments and taking part in numerous others from ESA's international partners during his six-month mission, named Principia, after Isaac Newtons ground-breaking Naturalis Principia Mathematica, which describes the principal laws of motion and gravity.
A Tesla-SpaceX merger may be needed to help Tesla compete with other companies developing electric and autonomous vehicles. (Tim Peake / ESA/NASA via Getty Images)
At first glance, it may seem as if building an affordable, long-range electric automobile and putting a man on Mars have very little to do with one another. However, Morgan Stanley analyst Adam Jonas says that electric vehicle and battery storage company Tesla Inc (Nasdaq: TSLA) and commercial spaceflight company SpaceX may end up sharing more than a common CEO.
According to Jonas, there are a number of reasons why a potential Tesla-SpaceX merger – both companies are led by Elon Musk – may make sense. The primary reason for a marriage between the two may simply be out of necessity if Tesla continues to struggle with its finances. Jonas says the competition will only get tougher for Tesla in coming years.
[See: 7 of the Best Stocks to Buy for 2018.]
"We have argued for some time that Tesla's addressable market of sustainable transport will attract fierce competition from some of the world's best capitalized tech firms with arguably superior access to capital, talent and business models that can monetize vehicle data and content opportunities, threatening the long-term independence of Tesla as a standalone entity," he says.
In addition, Jonas says Musk will likely devote more of his time to SpaceX in the future given that it seems to be his most passionate project. Jonas says Tesla may have more "key man risk" than any other company Morgan Stanley covers. In other words, if Musk steps down as Tesla CEO to focus on SpaceX, it could be disastrous for Tesla and its investors.
In November, Kynikos Associates founder and Tesla short seller Jim Chanos said he expects Musk to resign Tesla's CEO by 2020.
"Obviously this is not being valued as a car company, it's being valued on Musk ... he's the reason people own the stock," Chanos said.
[See: 7 of the Best Energy Stocks to Buy for 2018.]
Jonas says SpaceX's financial situation may be better than Tesla's, and SpaceX has a much wider long-term competitive moat than Tesla does.
Jonas also sees the potential for overlapping technologies in material science, manufacturing and artificial intelligence. Finally, Musk and his companies have a history of joining forces in times of financial need. When SolarCity was struggling as an independent company, Tesla snatched it up and assumed its massive debt burden.
For now, Jonas says investors should be cautions when it comes to Tesla given all the unknowns. Morgan Stanley has an "equal-weight" rating for Tesla and a $370 price target for the stock.
SpaceX Is Just the Thing to Help Tesla Stock
Morgan Stanley says a Tesla-SpaceX merger makes sense.
By Wayne Duggan, Contributor |Dec. 6, 2017, at 7:52 a.m.
SpaceX Is Just the Thing to Help Tesla Stock
IN SPACE - APRIl 10: (EDITORIAL USE ONLY) (NO SALES) This handout image supplied by the European Space Agency (ESA), shows a view of The Palms, Dubai as the SpaceX Dragon spacecraft psses below, in an image taken by ESA astronaut Tim Peake from the International Space Station on April 10, 2016. ESA astronaut Tim Peake is performing more than 30 scientific experiments and taking part in numerous others from ESA's international partners during his six-month mission, named Principia, after Isaac Newtons ground-breaking Naturalis Principia Mathematica, which describes the principal laws of motion and gravity.
A Tesla-SpaceX merger may be needed to help Tesla compete with other companies developing electric and autonomous vehicles. (Tim Peake / ESA/NASA via Getty Images)
At first glance, it may seem as if building an affordable, long-range electric automobile and putting a man on Mars have very little to do with one another. However, Morgan Stanley analyst Adam Jonas says that electric vehicle and battery storage company Tesla Inc (Nasdaq: TSLA) and commercial spaceflight company SpaceX may end up sharing more than a common CEO.
According to Jonas, there are a number of reasons why a potential Tesla-SpaceX merger – both companies are led by Elon Musk – may make sense. The primary reason for a marriage between the two may simply be out of necessity if Tesla continues to struggle with its finances. Jonas says the competition will only get tougher for Tesla in coming years.
[See: 7 of the Best Stocks to Buy for 2018.]
"We have argued for some time that Tesla's addressable market of sustainable transport will attract fierce competition from some of the world's best capitalized tech firms with arguably superior access to capital, talent and business models that can monetize vehicle data and content opportunities, threatening the long-term independence of Tesla as a standalone entity," he says.
In addition, Jonas says Musk will likely devote more of his time to SpaceX in the future given that it seems to be his most passionate project. Jonas says Tesla may have more "key man risk" than any other company Morgan Stanley covers. In other words, if Musk steps down as Tesla CEO to focus on SpaceX, it could be disastrous for Tesla and its investors.
In November, Kynikos Associates founder and Tesla short seller Jim Chanos said he expects Musk to resign Tesla's CEO by 2020.
"Obviously this is not being valued as a car company, it's being valued on Musk ... he's the reason people own the stock," Chanos said.
[See: 7 of the Best Energy Stocks to Buy for 2018.]
Jonas says SpaceX's financial situation may be better than Tesla's, and SpaceX has a much wider long-term competitive moat than Tesla does.
Jonas also sees the potential for overlapping technologies in material science, manufacturing and artificial intelligence. Finally, Musk and his companies have a history of joining forces in times of financial need. When SolarCity was struggling as an independent company, Tesla snatched it up and assumed its massive debt burden.
For now, Jonas says investors should be cautions when it comes to Tesla given all the unknowns. Morgan Stanley has an "equal-weight" rating for Tesla and a $370 price target for the stock.
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