IT'S OFFICIAL: Goldman Sachs is advising Elon Musk on his plans to take Tesla private (TSLA)


Kiichiro Sato/AP

Two days after Elon Musk said he was "excited to work with Silver Lake and Goldman Sachs" as financial advisers in his bid to take Tesla private, at least half of the tweet has been confirmed.

In a note to clients Wednesday, Goldman Sachs said it was suspending research coverage of Tesla because it was "acting as a financial advisor in connection with a matter that is fundamental to the reasonable analysis of the rating and price target for the stock."

"Earnings estimates during this period will be made without regard to the proposed matter," Goldman said, adding that the "not rated" status "will continue until such time as sufficient information is available, and/or contingencies appear resolved, to allow such analysis."

It is typical for a bank to suspend coverage when its investment-banking unit does business with a company under the bank's sell-side department's research coverage. The two departments of any given bank are legally required to maintain independence through what is known as a Chinese wall.

It's unclear whether the arrangement was finalized at the time of Musk's tweet. On Tuesday, Bloomberg reported that the Goldman Sachs Tesla analyst David Tamberrino had not yet received a mandate to suspend coverage at the time of the tweet.

Curiously enough, Goldman Sachs is one of the most bearish on Wall Street when it comes to Tesla. It's surprising that Musk, who has often publicly bemoaned his skeptics and short sellers, would choose such a pessimistic firm. A University of Michigan professor told Business Insider last week that companies were much more likely to choose a firm with a more favorable outlook on the stock.

The New York Times reported on Wednesday that Silver Lake, the other half of Musk's tweet, had been assisting in an unpaid role with the transaction but had not yet been formally tapped as an adviser.

Musk's cryptic tweets have wreaked havoc on Tesla's stock price since his first announcement last Tuesday. After surging to an all-time high of $389 shortly after Musk suggested there was "funding secured" to take Tesla private, shares have since given up all their gains.

Shares sank another 4% on Wednesday, as low as $333, after a Fox Business report said the Securities and Exchange Commission had formally subpoenaed Tesla over Musk's tweets. That report follows stories from The Wall Street Journal and Bloomberg saying the top stock regulator was investigating Musk's tweets.

Goldman's confirmation has brought Tesla up from its session lows, and the stock is now trading down about 4%, at $336.

Tesla shares are up about 5% this year.

More about Tesla's bid to go private:

Now read:

Markets Insider

NOW WATCH: INSIDE WEST POINT: What it's really like for new Army cadets on their first day

See Also:

SEE ALSO: The SEC reportedly sent subpoenas to Tesla concerning Elon Musk's tweets about taking Tesla private (TSLA)


More Related News

Wall Street
Wall Street's convinced that Tesla will need to raise more cash - and has some theories about how and when that may happen (TSLA)

Wall Street's convinced that Tesla will need to raise more cash, and it has some theories about how and when that may happen. Morgan Stanley said that in addition to a capital raise in 2018, Elon Musk might also need an outside partner for more financing. Wall Street remains doubtful that Tesla will go through the rest of 2018 without raising fresh capital.

Late to the party, German carmakers join race against Tesla
Late to the party, German carmakers join race against Tesla

After years watching Tesla's electric cars speed ahead while they have been on the defensive over an industry-wide diesel emissions scandal, German high-end manufacturers have finally unveiled their first challengers to the Californian upstart. Mercedes-Benz maker Daimler, BMW and Volkswagen's Audi and Porsche subsidiaries between them control some 80 percent of the worldwide premium car market. Audi rolled out its "E-Tron", BMW its "iNext" and Mercedes its "EQC", while Porsche presented an electric coupe, the "Mission E".

Billionaire investor questions Elon Musk getting
Billionaire investor questions Elon Musk getting 'a pass' after bombshell tweets

Billionaire investor Sam Zell says he would have been imprisoned if he had followed Tesla CEO Elon Musk when announcing taking a company private.

Warren Buffett Invested $5B in Goldman During the 2008 Crisis. What
Warren Buffett Invested $5B in Goldman During the 2008 Crisis. What's It Worth Now?

Buffett takes the long view. Will you invest in Goldman, too?

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Economy

Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.