Investor's Corner
Tesla’s Autopilot probe worries Morgan Stanley with ‘reputational risks’
The recently launched Tesla Autopilot probe by the NHTSA is said to be a greater threat to the automaker’s reputation than its financial situation, according to a new note from Morgan Stanley. Headed by analyst Adam Jonas, the note outlines the potential risks that Tesla could face with the probe, which intends to investigate 11 instances of Autopilot-equipped cars crashing into emergency vehicles, according to the documents.
The note outlines four potential risk factors that Tesla could face in a long and drawn-out battle to clear its name of any wrongdoing. In the initial years of autonomous driving development, nearly any instance of a vehicle being involved in an accident has increased skepticism over the potential of future self-driving cars. While Tesla Autopilot only operates on Level 2 autonomy, with Level 5 being a fully operational self-driving machine, the company admittedly states that drivers should still remain alert while the vehicle is in operation, never taking their eyes off the road.
However, this is not the instance for every driver. While Autopilot vehicles from Tesla were involved in accidents on a significantly less-frequent occasion than the national average based on NHTSA statistics, Tesla vehicles involved in accidents seem to catch more media attention than any other instance on the road. After all, we don’t hear about every Chevy Malibu or Ford F-150 crash that occurs, but the false narrative that Teslas drive themselves still floats around in the form of catchy headlines or misleading articles.
The chance for reputational risks is one of the most notable points of the Morgan Stanley note and is the point that the analysts expand on the most. “Vehicle safety actions and recalls (both voluntary and involuntary) are a fact of life in the auto industry, despite cars achieving greater capability and quality over time. While we are not making any changes to our Tesla model and price target at this time, the NHTSA serves as a reminder to investors about the importance of vehicle safety as we turn over greater portions of driving to software in a network,” the note said.
A Tesla Model 3 on Autopilot. [Credit: LivingTesla/YouTube]
Of course, semi-autonomous vehicles, and autonomy in general for automotive, is a young and relatively new feature in the world of cars. There are bound to be mistakes and incidents just as there were with early vehicles. Accidents happen, but the early adopters of motor vehicles did not give up on the task of making them better and safer, and that’s precisely what will happen as more companies take a crack at the potential autonomous driving sector.
“The regulatory, legal, and moral/ethical nuances are difficult, if not impossible, to model. As human driving transitions to computer driving, accident frequency is expected to decline by 90% or more (some experts insist accident frequency must ultimately fall by greater than 99.9%). At the same time, accident ‘fault’ transitions from someone to something,” the note also states. “Just our view, but there is no moral equivalency between a ‘human-caused’ traffic fatality and a ‘system-caused’ traffic fatality. Over time, we believe the industry should be in position to provide vehicle data for 3rd party validation to prove the significant societal/health and safety benefits of autonomy.
Morgan Stanley on the NHTSA probe ??$TSLA pic.twitter.com/wF9r2fuMsq
— David Tayar (@davidtayar5) August 18, 2021
As noted yesterday in an interview with former Ford CEO Mark Fields, the NHTSA study into Tesla could take up to 18 months. Morgan Stanley reiterates this point in its note, especially with Autopilot’s “high profile nature.” Unfortunately, Tesla’s flashy name and mainstream personality as an automaker, especially a revolutionary one, has put them at center stage for this kind of attention. Those with a reasonable platform may not understand all of the functionalities or safety precautions of Autopilot’s nature. Still, unfortunately, many of the accidents are being described as the software’s fault, although many of the instances are actually driver errors.
At the time of writing, TSLA stock was trading at $689.79, up over 3.6%.
Disclosure: Joey Klender is a TSLA Shareholder.
Elon Musk has firmly denied recent media reports suggesting that SpaceX has reduced its target valuation for an upcoming initial public offering.
The denial came directly from the SpaceX and Tesla frontman on his social media platform X, where he responded with a single word, “False,” to a post from ZeroHedge that cited Bloomberg sources.
This swift rebuttal underscores Musk’s ongoing effort to manage speculation surrounding one of the most anticipated market debuts in recent history.
False
— Elon Musk (@elonmusk) May 29, 2026
According to the disputed reports, SpaceX had lowered its IPO valuation goal to at least $1.8 trillion from previous ambitions exceeding $2 trillion.
The claims emerged amid growing anticipation for the company’s confidential S-1 filing, which positions it for a potential public listing as early as June.
Some had pointed to strong revenue growth, particularly from the Starlink satellite internet service, which contributed heavily to the firm’s 2025 figures of $18.7 billion. Yet challenges persist in other areas, including substantial investments and losses tied to ambitious projects like Starship development and artificial intelligence initiatives, which plan to make life multiplanetary eventually.
Musk’s response highlights a pattern in which he actively counters what he views as inaccurate portrayals of his companies’ trajectories.
SpaceX, already valued privately at extraordinary levels, stands as a cornerstone of Musk’s empire alongside Tesla and xAI. The entrepreneur has long emphasized the transformative potential of reusable rockets and global broadband access, factors that fuel investor enthusiasm despite operational hurdles.
By rejecting the valuation downgrade narrative, Musk signals confidence in SpaceX’s fundamentals and its readiness for public markets on terms favorable to its long-term vision. People have been waiting a very long time to invest in SpaceX, and the valuation, as well as the introductory share price, is not going to need adjusting.
They’ll have plenty of suitors.
This episode reflects broader dynamics in the technology sector, where rumors often swirl around high-profile entities. Musk’s direct engagement with media narratives serves to maintain transparency and control the narrative around his ventures.
As SpaceX prepares for greater scrutiny in public markets, the founder’s denial reinforces optimism about its prospects. Supporters argue that the company’s innovative edge positions it for enduring success, far beyond short-term valuation debates. With the denial now public, attention turns to forthcoming regulatory filings that could provide clearer insights into SpaceX’s strategy and financial health.
The coming weeks promise to reveal more about how SpaceX will transition into a publicly traded powerhouse.
Elon Musk
The Tesla and SpaceX merger everyone is talking about is quietly building
Tesla and SpaceX may be closer to merging than Wall Street or either company is admitting.
Elon Musk has reportedly discussed merging Tesla and SpaceX with people close to him, according to CNBC, which cited sources familiar with the conversation. Tesla employees have long expected such a transaction and the topic is openly discussed internally, according to internal sources. With SpaceX is days away from kicking off its Wall Street roadshow for what could be the largest IPO in market history, this would be the first time the company will have public market currency to execute a stock-for-stock deal with Tesla.
The financial logic for a merger would make sense. A combined SpaceX and Tesla would create a conglomerate spanning rockets, satellites, electric vehicles, AI infrastructure, and energy storage valued at roughly $3.35 trillion to $3.6 trillion based on SpaceX’s IPO target range and Tesla’s current market capitalization. The two companies are already more intertwined than most people realize. SpaceX bought $697 million worth of Tesla Megapack systems for xAI data centers and $131 million worth of Cybertrucks. Tesla invested $2 billion in xAI, which subsequently merged with SpaceX. Past transactions also include Tesla selling solar equipment and parts to SpaceX, and SpaceX helping with Cybertruck materials.
Will Tesla join the fold? Predicting a triple merger with SpaceX and xAI
Musk himself signaled where this was heading in November 2025 when he posted on X, “My companies are, surprisingly in some ways, trending towards convergence.” Tesla and SpaceX announced a joint semiconductor fabrication facility in Austin called Terafab on the Gigafactory Texas campus, covering two advanced chip factories, with one serving Tesla’s AI needs for vehicles and Optimus robots, the other targeting space-based data centers under SpaceX’s infrastructure vision.
Wedbush analyst Dan Ives places the probability of a merger at 80% to 90% with a target completion in the first half of 2027. The mechanics of a deal became possible the moment SpaceX filed its S-1. Legal experts said a merger likely would not spark antitrust issues but would raise concerns among shareholders in each company, with questions around which company would be the parent, how a stock swap would take place, and who determines the appropriate price. Musk holds about 20% of Tesla’s equity but controls 85.1% of SpaceX’s voting power through a super-voting share class, meaning he would largely be negotiating the terms with himself.
Not everyone is convinced the timing is imminent. Traders on Kalshi place only 33% odds that a merger will happen before May 2027. The more immediate concern for Tesla shareholders is whether the SpaceX IPO pulls capital and Musk’s attention away from Tesla before any merger consolidates the upside for both.
What is clear is that the structural groundwork is already being laid. The Terafab announcement, the xAI merger, the shared supply chain, the cross-company balance sheet transactions, and now the IPO all point in the same direction. Whether the merger follows in 2027 or later, the two companies are already operating more like divisions of a single entity than independent competitors.
Elon Musk
SpaceX just filed for the IPO everyone was waiting for
SpaceX filed its public S-1, revealing $18.7 billion in revenue and billions in losses.
SpaceX publicly filed its S-1 registration statement with the Securities and Exchange Commission on May 20, 2026, making its financial details available to the public for the first time ahead of what could be the largest IPO in history.
An S-1 is the formal document a company must submit to the SEC before going public. It includes audited financials, risk factors, business descriptions, and how the company plans to use the money it raises. Companies are required to file one before selling shares to the public, and it must be published at least 15 days before the investor roadshow begins. SpaceX had already submitted a confidential draft to the SEC in April, which allowed regulators to review the filing privately before it went public.
The S-1 reveals that SpaceX generated $18.7 billion in consolidated revenue in 2025, driven largely by its Starlink satellite internet division, which posted $11.4 billion in revenue, growing nearly 50% year over year. Despite that growth, the company lost about $4.9 billion in 2025 and has burned through more than $37 billion since its founding.
SpaceX just forced Verizon, AT&T and T-Mobile to team up for the first time in history
A significant portion of those losses trace back to xAI, Elon Musk’s artificial intelligence company, which was recently merged into SpaceX. SpaceX directed roughly 60% of its capital spending in 2025 to its AI division, totaling around $20 billion, yet that division lost billions and grew revenue by only about 22%.
SpaceX plans to list its Class A common stock on Nasdaq under the ticker SPCX, with Goldman Sachs, Morgan Stanley, and Bank of America leading the offering. The dual-class share structure means going public will not meaningfully reduce Musk’s control, as Class B shares he holds carry 10 votes per share compared to one vote for public Class A shares.
The company is targeting a raise of around $75 billion at a valuation of roughly $1.75 trillion, which would make it the largest IPO ever. The investor roadshow is reportedly planned for June 5.
Tesla Full Self-Driving expansion in Europe continues with new addition
Elon Musk strikes down reports on SpaceX IPO rumors
