Tesla shares surged: Barclays advised buying them ahead of the merger with SpaceX

Barclays upgraded its rating on Tesla shares from “Equal Weight” (“in line with the market,” corresponding to a neutral “hold” recommendation) to “Overweight” (“above the market,” a “buy” recommendation), and raised its price target from $370 to $450. The new target implies a 21% increase in the automaker’s stock price relative to Friday’s closing price. The bank’s analyst, Dan Levy, cites a potential merger between Tesla and another of Elon Musk’s companies—the aerospace firm SpaceX—as the main reason, according to CNBC.

Barclays' new price target of $450 implies a 21% increase in Tesla's stock price relative to Friday's closing price. As the bank’s analyst Dan Levy notes, recent discussions about Tesla have centered on a potential merger of Elon Musk’s two companies. The market is already largely anticipating a deal—at a premium to Tesla’s current share price—and, according to Levy, these expectations should push the automaker’s stock price higher.

"Since the market is already largely anticipating the merger and expecting a certain premium on Tesla's stock price, we believe this should drive the stock higher," Levy wrote in a note to clients.

Last week, Musk called a potential merger between Tesla and SpaceX a "good idea" and said that committees had already been formed at both companies to discuss the merger.

In addition to the prospects of a deal with SpaceX, Barclays expects Tesla’s automotive business to show improved performance. According to Levy’s assessment, the business will return to growth in 2026 after two years of decline, and performance could improve in 2027 thanks to demand for the Full Self-Driving (FSD) system and increased exports from the Giga Shanghai plant in China.

Tesla’s energy division could be an additional source of growth. According to the company, its products for 2027 are virtually sold out due to high demand from data centers. Levy believes this could drive growth in the division’s shipments by more than 50%.

The analyst also noted the sharp increase in the mileage of Tesla's robotaxis. In his view, this strengthens the company's prospects in its competition with Waymo, Alphabet's self-driving car service.

Tesla shares are up 6.3% in trading on October 26. However, they are down 12% year-to-date. On Wall Street, opinions on the company’s prospects are divided: 25 analysts recommend buying the automaker’s stock, 23 recommend holding it, and three recommend selling it, according to MarketWatch.

Last week, Tesla reported adjusted quarterly earnings per share that exceeded Wall Street expectations, but announced a reduction in its 2026 capital expenditure forecast from $25 billion to $20 billion, raising concerns about the timeline for its robotics and AI projects. Following the release of the earnings report, the company’s stock price fell, but it fully recovered from that decline by October 26, partly due to a rally.

This article was AI-translated and verified by a human editor