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Oppenheimer Weighs in on Tesla (TSLA) Soap Opera


If you missed the latest episode of Tesla (NASDAQ:TSLA) going private, here’s a small spoiler: the SEC is the new guest star. Last week, news outlets reported that the SEC was probing CEO Elon Musk’s tweets on social media. In the eight days since Musk tweeted about taking Tesla private, the automaker has not filed paperwork to disclose a material event or disclosure, and that’s kind of a big deal.

Oppenheimer analyst Colin Rusch commented, “As the noise around a potential take-private of TSLA amplifies, we believe verifiable information is extremely limited. We are looking for the following signals for direction on TSLA shares. First, if an SEC investigation is initiated, we believe it would signal suspected wrongdoing that, if proved true, could come with monetary and criminal penalties and could justify a downgrade. Second, a viable path to a take-private transaction with a large enough financial sponsor and a compelling structure becoming known could signal a move toward the suggested $420 take-out. Third, if a viable transaction emerges, we would expect 6-12+ months to close, which could complicate any funding necessary should execution timelines slip, which we believe is possible due to distractions from this situation.”

What to expect next? “We anticipate continued hightened media coverage of TSLA and measured communication from the company. Given the highly unusual circumstances around this situation and limited information, we expect shares will drift along with the latest media reports but be largely flat until increased clarity is achieved on the take-private transaction details and SEC response to the communication method,” the analyst added.

Net net, Rusch reiterates an Outperform rating on Tesla shares, with a price target of $385, which represents a potential upside of 15% from where the stock is currently trading. (To watch Rusch’s track record, click here)

Overall, Wall Street is not convinced that Musk’s tech empire’s reward is worth all the risk, especially when taking note that TipRanks analytics exhibit TSLA as a Hold. Based on 25 analysts polled in the last 3 months, 10 rate Tesla stock  a Buy, 7 maintain a Hold, while 8 recommend a Sell. The 12-month average price target stands at $320.85, marking a nearly 5% downside from where the stock is currently trading.