Tesla stock TSLA rose more than 5% on Monday after Barclays upgraded the electric vehicle maker, citing a potential merger with SpaceX and improving prospects for its automotive, energy storage, and autonomous driving businesses.
Barclays analyst Dan Levy upgraded Tesla to Overweight from Equal Weight and raised his price target to $450 from $370, implying nearly 19% upside from recent levels.
The upgrade follows confirmation from Chief Executive Elon Musk last week that Tesla and SpaceX had established independent committees to explore a possible combination.
Musk described the merger as a “good idea” but stressed that an agreement was not certain.
SpaceX merger prospects drive Barclays upgrade
Barclays expects the prospect of a merger to support Tesla shares, partly because of the potential takeover premium for shareholders.
“With a combination heavily expected, and with expectation for some premium to Tesla stock, we believe this should drive upside for the stock,” Levy wrote.
A combination could bring together the companies’ artificial intelligence capabilities, semiconductor manufacturing, robotics and connectivity businesses.
Yorkville analyst Dan Ives also sees a potential merger as a strategic development for both companies.
He argued that SpaceX’s recent $40 billion debt financing deal for graphics processing units (GPUs) would expand its computing infrastructure and strengthen its position against major cloud providers.
Ives estimated an 80% to 90% chance of a merger by the end of 2027 and said he believed a deal would require a Tesla share price above $500.
Automotive growth, FSD and energy storage outlook
Barclays’ more positive view also reflects expectations for an improvement in Tesla’s core automotive business.
Tesla reported third-quarter revenue of $28.05 billion, above LSEG estimates of $27.88 billion.
Adjusted earnings were $0.48 per share, down from $0.50 a year earlier but above Wall Street estimates.
Vehicle deliveries declined 2% to 486,532 units.
Despite the mixed results, Levy expects the automotive business to return to growth in 2026, with further improvement in 2027.
He cited demand supported by Full Self-Driving (FSD) and increasing exports from Tesla’s Shanghai factory.
Tesla reported 1.74 million FSD users at the end of the third quarter, compared with 1.04 million a year earlier.
More than 75% of new Tesla vehicles delivered in North America included FSD subscriptions.
Barclays also expects Tesla’s energy storage shipments to increase by more than 50% in 2027, supported by demand from data centres.
The company has also reported progress in its Robotaxi business.
Tesla said cumulative unsupervised Robotaxi miles increased eightfold during the third quarter, although the rollout has been slower than initially expected.
Investors weigh growth opportunities against risks
Tesla’s shares have faced pressure this year as investors assess its profitability and the time required for newer businesses to contribute meaningfully to earnings.
Although sales have increased approximately 13% so far this year compared with 2025, operating income has declined around 30% year over year.
The potential SpaceX merger offers another source of investor interest, but its outcome remains uncertain.
Tesla’s valuation will also depend on whether its automotive operations recover and whether autonomous driving, robotics and energy storage can deliver sustainable growth.
The post Why is Tesla stock gaining 5% today? appeared first on Invezz