Investor's Corner

Tesla gains Goldman Sachs as financial advisor amid Elon Musk’s go-private efforts

Goldman Sachs analyst David Tamberrino recently revealed that the investment banking firm is acting as Tesla’s financial advisor for its go-private initiative. Tamberrino released the update in a recent note to clients, which stated that the firm’s ratings and price targets for Tesla stock (NASDAQ:TSLA) would be removed.

Following is an excerpt from the Goldman Sachs analyst’s recent note.

“The Americas Investment Review Committee has determined that the ratings and price target for Tesla Inc. should be removed. Goldman Sachs is acting as a financial advisor in connection with a matter that is fundamental to the reasonable analysis of the rating and price target for this stock. This ‘Not Rated’ status will continue until such time as sufficient information is available, and/or contingencies appear resolved, to allow such analysis. Earnings estimates during this period will be made without regard to the proposed matter.”

Tamberrino’s update comes as a confirmation to a tweet posted by Elon Musk earlier this week, when he mentioned that he was working with Silver Lake and Goldman Sachs as financial advisors for Tesla’s privatization efforts. Musk also named Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson, as legal advisors for the company.

Goldman Sachs’ involvement as Tesla’s financial advisor in its go-private efforts is almost an ironic turn of events for the bank and the electric car maker. After all, Goldman Sachs’ equity research division — where analyst David Tamberrino works at — has maintained a mostly bearish stance on the company. When Tesla ended the first quarter producing more than 2,000 Model 3 in a week, for example, Tamberrino released a note expressing his negative outlook on the company and the ongoing Model 3 ramp.

Tesla maintained its target of producing 5,000 Model 3 per week by the end of Q2 then, but Tamberrino wrote in a note to clients that he believes Tesla would only be able to sustain a production rate of 1,400 Model 3 per week in the second quarter. The Goldman Sachs analyst is also a proponent of the idea that Tesla would have to raise additional capital this 2018.

Despite the stance of the  firm’s equity research division, Goldman Sachs’ investment division is one of Tesla’s shareholders. Even as Tamberrino released his pessimistic outlook on Tesla back in April, Goldman Sachs’ investment bank increased its stake in the company by buying more than 470,000 TSLA shares.

Tesla has formed a select committee to evaluate the proposals for the company’s possible privatization. The committee — comprised of independent directors Brad Buss, Robyn Denholm and Linda Johnson Rice — noted on Tuesday that they are waiting for Elon Musk’s formal proposal to be submitted.

Tesla stock has taken a recent dive amidst reports alleging that the SEC had issued subpoenas over Elon Musk’s tweets about the funding of Tesla’s possible privatization. As of writing, Tesla stock is down 3.06% at $336.94 per share.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla gains Goldman Sachs as financial advisor amid Elon Musk’s go-private efforts
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