Investor's Corner
Wall Street’s reaction to Tesla’s proposed buyout of SolarCity
Since the proposed deal of Tesla to acquire SolarCity in a stock exchange with no cash involved was announced, a flurry of reports flooded the Internet, pretty much with many Wall Street reporters and pundits decrying the proposed deal as “crazy”, “not a no-brainer”, an “eclipse”, “plot of video game”, “sounds nuts”, but also with a few noting that Elon was “creating a clean energy empire” or “offering a one-stop shop.”
At the same time, the after-market reaction was swift: TSLA stock plunged 12% and SCTY stock rose 18%. This action was predictable. Since the Tesla – SolarCity deal is an exchange of stock, no cash deal, when adding about 12 million new shares, an 8% dilution of TSLA stock will occur. This dilution covers the majority of TSLA stock drop. Another negative factor is going from $2 billion of TSLA cash flow losses to $4.8 billion of cash flow losses of the combined companies, an increase of over 130%. Thirdly, TSLA debt will double after the deal. So a 12% drop should not leave anyone surprised.
Similarly, the assured “premium of approximately 21% to 30% over the closing price of SolarCity’s shares,” as stated in the letter to Lyndon Rive, pretty much matches the 29 percent rise of SCTY in extended trading, also matching SolarCity’s average 12-month price target of $29.82 among analysts surveyed by Bloomberg. So the stock action of both TSLA and SCTY was completely predictable.
Looking at the reporters / pundits comments, Bloomberg was the outlet with the most reports, 4 in all.
Tom Randell of Bloomberg reported in “Musk Buys Musk: Tesla’s SolarCity Deal by the Numbers”, that “ either Musk is bailing out a beleaguered company that’s run by his cousin, Lyndon Rive, or he’s consolidating a clean-energy empire at rock-bottom prices. Or both.”
Tom is one of the most bullish on the deal, saying that “It allows Musk to integrate the three-legged stool of clean energy in a way the world has never seen: electric cars, solar power, and grid battery storage all in one place. If so inclined, you could provide for all of your energy needs without ever leaving the Tesla family.”
Chris Martin of Bloomberg reported in “In SolarCity Bid, Tesla’s Musk Targets Customer Who Wants It All” that “Tesla Motors Inc.’s offer to buy SolarCity Corp. would combine two already deeply linked companies to offer clean energy enthusiasts a one-stop shop” and that “the challenge I see around this for both companies is that they’re kind of strapped for cash,” quoting Hugh Bromley, an analyst for Bloomberg New Energy Finance in New York. “They both need cash injections to fuel their growth.”
Dana Hull of Bloomberg reported in “Tesla Takeover of SolarCity Not a ‘No-Brainer’ for Investors” that “Oppenheimer & Co. analysts including Colin Rusch downgraded Tesla to perform from outperform in a research note published late Tuesday, saying they expect “a robust shareholder fight over this acquisition centered on corporate governance” and that “Credit Suisse Group AG analysts including Patrick Jobin said in a separate note that they expect “resistance from Tesla shareholders” and warned of “many corporate governance challenges.”
Lastly Liam Denning of Bloomberg reported in “Tesla’s SolarCity Eclipse” that “the timing is odd, to say the least. Tesla’s all-stock offer is pitched as providing SolarCity’s investors with a premium of 21 to 30 percent, based on a proposed valuation band that’s subject to completing due diligence (itself an unusual proposal)” and “Tesla is jumping in as SolarCity’s entire business model is being openly questioned amid rapid cash burn and stubbornly high overheads.”
Ominously he also reported that “Tuesday evening, not long after news of the offer broke, Tesla’s valuation had dropped by $3.8 billion in after-hours trading — 1.8 times the entire market capitalization of SolarCity before the announcement. Awkward, much?”
Ary Levi of CNBC reported in “Elon buying Elon: Sounds a lot like the plot of a video game” that this was “potential deal in which one of the country’s best-known tech billionaires will effectively transfer cash from one of his pockets to another – sounds nuts.” and joked about that “even if we all exist in a simulation, as Musk suggested at the Code Conference this month, he still has to obey securities laws.”
Christine Wang of CNBC reported in “Bid for SolarCity may mean Elon Musk doesn’t see Tesla as an auto company” quoting trader Karen Finerman saying that “Tesla’s offer, valued up to $28.50 per share, doesn’t seem like a gigantic price for a company that was trading significantly higher not that long ago.”
Charley Grant and Spencer Jakab of The Wall Street Journal reported in “Tesla Buying SolarCity: This Deal Defies Common Sense” that “just a day after Tesla boss Elon Musk made the odd boast that one of its cars “floats well enough to turn into a boat,” he did something even odder. Tesla’s bid for solar panel installation firm SolarCity on Tuesday afternoon is the sort of move that, even for the most Panglossian Silicon Valley investor, stretches the bounds of industrial logic” and that “as Mr. Musk warned about his amphibious wonder car, such harebrained schemes can only float “for short periods of time.”
Mike Ramsey, Lynn Cook and Mike Spector of The Wall Street Journal reported in “Tesla Offers to Acquire SolarCity”, quoting Elon saying that “the acquisition aims to create a company employing nearly 30,000 people with all products renamed “Tesla” that will package electric cars, batteries and solar panels for customers.” They also warned that “it would also add to the growing complexity and vertical integration of Tesla and add an unprofitable operation to its already-strained finances.”
Nichola Groom and Paul Lienert of Reuters reported in “Tesla offers $2.8 billion for SolarCity in ‘no brainer’ deal for Musk”, quoting Elon saying that that “instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit. It’s an obvious thing to do.” But they noticed that “Tesla investors punished the company’s shares, however.”
Elon Musk
Tesla analysts believe Musk and Trump feud will pass
Tesla CEO Elon Musk and U.S. President Donald Trump’s feud shall pass, several bulls say.
Tesla analysts are breaking down the current feud between CEO Elon Musk and U.S. President Donald Trump, as the two continue to disagree on the “Big Beautiful Bill” and its impact on the country’s national debt.
Musk, who headed the Department of Government Efficiency (DOGE) under the Trump Administration, left his post in May. Soon thereafter, he and President Trump entered a very public and verbal disagreement, where things turned sour. They reconciled to an extent, and things seemed to be in the past.
However, the second disagreement between the two started on Monday, as Musk continued to push back on the “Big Beautiful Bill” that the Trump administration is attempting to sign into law. It would, by Musk’s estimation, increase spending and reverse the work DOGE did to trim the deficit.
Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame!
And they will lose their primary next year if it is the last thing I do on this Earth.
— Elon Musk (@elonmusk) June 30, 2025
President Trump has hinted that DOGE could be “the monster” that “eats Elon,” threatening to end the subsidies that SpaceX and Tesla receive. Musk has not been opposed to ending government subsidies for companies, including his own, as long as they are all abolished.
How Tesla could benefit from the ‘Big Beautiful Bill’ that axes EV subsidies
Despite this contentious back-and-forth between the two, analysts are sharing their opinions now, and a few of the more bullish Tesla observers are convinced that this feud will pass, Trump and Musk will resolve their differences as they have before, and things will return to normal.
ARK Invest’s Cathie Wood said this morning that the feud between Musk and Trump is another example of “this too shall pass:”
BREAKING: CATHIE WOOD SAYS — ELON AND TRUMP FEUD “WILL PASS” 👀 $TSLA
She remains bullish ! pic.twitter.com/w5rW2gfCkx
— TheSonOfWalkley (@TheSonOfWalkley) July 1, 2025
Additionally, Wedbush’s Dan Ives, in a note to investors this morning, said that the situation “will settle:”
“We believe this situation will settle and at the end of the day Musk needs Trump and Trump needs Musk given the AI Arms Race going on between the US and China. The jabs between Musk and Trump will continue as the Budget rolls through Congress but Tesla investors want Musk to focus on driving Tesla and stop this political angle…which has turned into a life of its own in a roller coaster ride since the November elections.”
Tesla shares are down about 5 percent at 3:10 p.m. on the East Coast.
Elon Musk
Tesla investors will be shocked by Jim Cramer’s latest assessment
Jim Cramer is now speaking positively about Tesla, especially in terms of its Robotaxi performance and its perception as a company.
Tesla investors will be shocked by analyst Jim Cramer’s latest assessment of the company.
When it comes to Tesla analysts, many of them are consistent. The bulls usually stay the bulls, and the bears usually stay the bears. The notable analysts on each side are Dan Ives and Adam Jonas for the bulls, and Gordon Johnson for the bears.
Jim Cramer is one analyst who does not necessarily fit this mold. Cramer, who hosts CNBC’s Mad Money, has switched his opinion on Tesla stock (NASDAQ: TSLA) many times.
He has been bullish, like he was when he said the stock was a “sleeping giant” two years ago, and he has been bearish, like he was when he said there was “nothing magnificent” about the company just a few months ago.
Now, he is back to being a bull.
Cramer’s comments were related to two key points: how NVIDIA CEO Jensen Huang describes Tesla after working closely with the Company through their transactions, and how it is not a car company, as well as the recent launch of the Robotaxi fleet.
Jensen Huang’s Tesla Narrative
Cramer says that the narrative on quarterly and annual deliveries is overblown, and those who continue to worry about Tesla’s performance on that metric are misled.
“It’s not a car company,” he said.
He went on to say that people like Huang speak highly of Tesla, and that should be enough to deter any true skepticism:
“I believe what Musk says cause Musk is working with Jensen and Jensen’s telling me what’s happening on the other side is pretty amazing.”
Tesla self-driving development gets huge compliment from NVIDIA CEO
Robotaxi Launch
Many media outlets are being extremely negative regarding the early rollout of Tesla’s Robotaxi platform in Austin, Texas.
There have been a handful of small issues, but nothing significant. Cramer says that humans make mistakes in vehicles too, yet, when Tesla’s test phase of the Robotaxi does it, it’s front page news and needs to be magnified.
He said:
“Look, I mean, drivers make mistakes all the time. Why should we hold Tesla to a standard where there can be no mistakes?”
It’s refreshing to hear Cramer speak logically about the Robotaxi fleet, as Tesla has taken every measure to ensure there are no mishaps. There are safety monitors in the passenger seat, and the area of travel is limited, confined to a small number of people.
Tesla is still improving and hopes to remove teleoperators and safety monitors slowly, as CEO Elon Musk said more freedom could be granted within one or two months.
Investor's Corner
Tesla gets $475 price target from Benchmark amid initial Robotaxi rollout
Tesla’s limited rollout of its Robotaxi service in Austin is already catching the eye of Wall Street.
Venture capital firm Benchmark recently reiterated its “Buy” rating and raised its price target on Tesla stock (NASDAQ: TSLA) from $350 to $475 per share, citing the company’s initial Robotaxi service deployment as a sign of future growth potential.
Benchmark analyst Mickey Legg praised the Robotaxi service pilot’s “controlled and safety-first approach,” adding that it could help Tesla earn the trust of regulators and the general public.
Confidence in camera-based autonomy
Legg reiterated Benchmark’s belief in Tesla’s vision-only approach to autonomous driving. “We are a believer in Tesla’s camera-focused approach that is not only cost effective but also scalable,” he noted.
The analyst contrasted Tesla’s simple setup with the more expensive hardware stacks used by competitors like Waymo, which use various sophisticated sensors that hike up costs, as noted in an Investing.com report. Compared to Tesla’s Model Y Robotaxis, Waymo’s self-driving cars are significantly more expensive.
He also pointed to upcoming Texas regulations set to take effect in September, suggesting they could help create a regulatory framework favorable to autonomous services in other cities.
“New regulations for autonomous vehicles are set to go into place on Sept. 1 in TX that we believe will further help win trust and pave the way for expansion to additional cities,” the analyst wrote.
Tesla as a robotics powerhouse
Beyond robotaxis, Legg sees Tesla evolving beyond its roots as an electric vehicle maker. He noted that Tesla’s humanoid robot, Optimus, could be a long-term growth driver alongside new vehicle programs and other future initiatives.
“In our view, the company is undergoing an evolution from a trailblazing vehicle OEM to a high-tech automation and robotics company with unmatched domestic manufacturing scale,” he wrote.
Benchmark noted that Tesla stock had rebounded over 50% from its April lows, driven in part by easing tariff concerns and growing momentum around autonomy. With its initial Robotaxi rollout now underway, the firm has returned to its previous $475 per share target and reaffirmed TSLA as a Benchmark Top Pick for 2025.
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