TLDR
- Tesla stock opened at $342.27 on Monday, down 24% year-to-date coming into the session
- Wall Street is increasingly pricing in a potential Tesla/SpaceX merger as a key factor moving TSLA
- RBC analyst Tom Narayan says a deal would create a “vertical-integration-from-orbit-to-ground-AI ecosystem”
- Tesla’s Q2 revenue beat at $28.24 billion, but EPS of $0.33 missed the $0.50 consensus estimate
- Zevenbergen Capital trimmed its Tesla position by 0.6%, though the stock remains its third-largest holding
Tesla stock opened at $342.27 on Monday, up 0.3% in early trading, while SpaceX stock climbed 0.9% to $141.29. The S&P 500 futures were up 0.2% at the same time.
The two stocks have been moving in the same direction about two-thirds of the time over the past several weeks. Both gained for two consecutive weeks coming into Monday, and before that, both were on losing streaks at the same time.
The growing connection comes down to one thing: merger talk. Wall Street is increasingly betting that Elon Musk will combine his two companies, and that expectation is now a real driver of Tesla’s stock price.
RBC analyst Tom Narayan laid out the case in July. He wrote that a Tesla/SpaceX deal would create a “vertical-integration-from-orbit-to-ground-AI ecosystem,” combining Starlink’s connectivity, Tesla’s robotaxi and robotics operations, and SpaceX’s orbital computing infrastructure.
Narayan expects SpaceX would need to offer a premium to Tesla stockholders to get a deal done, though he didn’t pin down an exact figure.
ARK Invest’s Chief Futurist Brett Winton said recently that a merger announcement could come this year. ARK holds positions in both companies.
Earnings Miss Weighs on Sentiment
Tesla’s most recent quarterly results were a mixed bag. Revenue came in at $28.24 billion for Q2, beating the consensus estimate of $26.42 billion and up 25.5% year-over-year.
But earnings per share came in at $0.33, missing the $0.50 consensus by a wide margin. Net margin was 3.67%, and return on equity sat at 3.82%.
Analysts now expect Tesla to post full-year EPS of $0.88. The stock trades at roughly 317 times earnings, a valuation that leaves little room for error.
Institutional Moves
Zevenbergen Capital cut its Tesla position by 0.6% in Q2, selling 3,072 shares to end the quarter with 534,122 shares worth around $224.7 million. Tesla still makes up 5.1% of Zevenbergen’s portfolio and remains its third-largest holding.
On the other side, Vanguard raised its Tesla position by 2.6% in Q4, and Norges Bank added a new stake worth roughly $17.1 billion. Amundi lifted its position by 14% in Q1. Institutional investors and hedge funds now own 66.2% of the stock.
CFO Vaibhav Taneja sold 2,606 shares on June 8th at $402.20 each, a transaction worth around $1.05 million. The sale was made to cover tax obligations tied to equity award vesting.
Analyst price targets range from $445 to $500 among recent updates. JPMorgan cut its target from $475 to $445 with a neutral rating on July 23rd, while RBC maintained a $500 target with an outperform rating. The consensus average sits at $401.74, with an overall “Hold” rating based on 21 buys, 19 holds, and 4 sells.
Tesla’s 52-week range is $297.38 to $498.83, with a 50-day moving average of $370.77.
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