Investing.com — Piper Sandler revealed in a client note that it has built a model to assess how Tesla and SpaceX shares might react to a potential all-stock merger. <\/p>\n
Still guessing which stocks will beat the market? Our AI portfolio updates monthly and is outperforming the S&P 500 by 118%. See this month’s list \u00bb<\/a> <\/p>\n The firm said client interest in a deal has deepened since Elon Musk confirmed on Oct. 20 that both companies had formed special committees. <\/p>\n Analyst Alexander Potter noted Piper is unsure what terms any merger might carry, or whether a deal will be proposed at all. However, he identified the three most critical variables as the buyout premium, synergies and the discount for deal risk. <\/p>\n The most important factor is any premium SpaceX pays for Tesla and the implied exchange ratio. Potter noted that a 30% premium would not mean 30% upside for Tesla shares, because SpaceX stock, the currency for the deal, would instantly reprice. Any initial gain would also be discounted based on the likelihood of approval. <\/p>\n Piper believes a merger is more likely than not, given that Musk has called it a good idea. <\/p>\n Unsure what to buy ahead of earnings? Our AI’s recent pre-earnings calls delivered gains of +77% to +118% after results dropped. See this month’s earnings picks \u00bb<\/a> <\/p>\n “Given the above, we think it’s likelier than not that a merger will be proposed,” Potter wrote. <\/p>\n However, the firm expects investors to be skeptical that synergies are worth hundreds of billions of dollars. “Many believable scenarios imply initial re-pricing of less than +\/-15%,” the analyst added. <\/p>\n With limited upside, Potter said Tesla shareholders may push for a favorable exchange ratio. He expects them, excluding Musk, to need to be the largest ownership group in a combined company. <\/p>\n “Regardless, in most scenarios, Musk would have >70% voting control of any new entity,” the analyst said. <\/p>\n Piper rates Tesla Overweight and SpaceX Neutral. <\/p>\n Original Article <\/p>\n Analyst models potential market reaction to a SpaceX-Tesla all-stock merger<\/a> <\/p>\n Apple’s valuation leaves little room for earnings disappointment: Oppenheimer<\/a> <\/p>\n