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)

COMMENTS

More Related News

10 years after crisis, bank CEO pay swells again
10 years after crisis, bank CEO pay swells again

Ten years after Wall Street recklessness helped lead to the Great Recession, compensation for top bank CEOs is soaring even as pay flattens at junior levels. Compensation figures released so far by large banks this year suggest a rich season for CEOs, despite myriad worries for markets, including slowing global growth, trade wars and Brexit uncertainty. At Morgan Stanley, Chief Executive James Gorman will take home $29 million, up seven percent.

'Cancel Davos', blasts anti-elite author

This year's World Economic Forum in the Swiss ski resort of Davos is taking place under a cloud of popular anger that has destabilised major democracies from the US to Europe and Brazil. AFP spoke to one of the event's most trenchant critics, Anand Giridharadas, a former McKinsey consultant and ex-columnist for The New York Times. - What is Davos?

Elon Musk gets green light to deliver Tesla Model 3 cars in Europe
Elon Musk gets green light to deliver Tesla Model 3 cars in Europe

Tesla has secured approval from regulators to sell its Model 3 cars in Europe, in a move that will bring it in direct competition with the likes of BMW, Volkswagen and Peugeot in their home market. Dutch vehicle authority RDW approved Tesla's request to sell the most affordable of its electric cars on Monday, meaning that British customers can order the car from next month. Production of right hand driving vehicles, the standard in the UK, is not due to start until mid 2019. The announcement comes days after chief executive Elon Musk issued a letter to all of his employees, describing 2018 as "the most challenging in Tesla's history". In the same letter, Musk said he had...

Elon Musk's New SpaceX Starship: Here's Everything We Know So Far
Elon Musk's New SpaceX Starship: Here's Everything We Know So Far

The big reveal: Test flights will begin sooner than you think.

Berkshire
Berkshire's lithium venture may supply U.S. automakers, including Tesla - FT

The venture has been in talks to supply Tesla Inc (TSLA.O) with lithium, a component for batteries to power electric cars, the newspaper reported, citing people familiar with the company. Berkshire Hathaway's geothermal wells could produce up to 90,000 tonnes of lithium a year worth $1.5 billion

Leave a Comment

Your email address will not be published.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

Cancel reply

Comments

Top News: Economy

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