Gary Black, managing director of The Future Fund LLC, issued an alarm to Tesla Inc. (NASDAQ:TSLA) investors on Friday.
Black cautioned shareholders to remain skeptical of “overly positive” analyst takes regarding Elon Musk’s aerospace venture.
“Be wary of sell-side analysts’ overly positive opinions about SpaceX, a TSLA/SpaceX merger, or the merits of any specific IPO,” Black wrote on X. He highlighted a fundamental conflict of interest, noting that sell-side analysts are paid on commissions rather than the accuracy of their investment ideas.
The Massive SpaceX IPO Payday
The warnings come as reports suggest SpaceX could file for its initial public (IPO) offering as early as this week. The space giant is reportedly targeting a $1.75 trillion valuation and aims to raise up to $75 billion.
Black noted that at an expected $50 billion to $75 billion IPO size, SpaceX represents the “biggest payday for TSLA analysts in years.”
He suggested that analysts, eager for a slice of the deal underwritings and retail allocations, may feel pressured to align with management’s goals rather than investor interests.
The “Insurance Salesman” Analogy
Black used a pointed comparison to describe the current analyst landscape. “Quoting a TSLA sell-side analyst on the merits of SpaceX or a SpaceX/TSLA merger would be like quoting your insurance salesman on whether you need more insurance,” Black stated.
While some analysts, like Dan Ives of Wedbush Securities, have suggested a merger is “likely in 2027” and could offer a 55% upside to a $600 price forecast for Tesla.
Dilution and Conglomerate Discounts
The Future Fund managing director previously warned that a merger could trigger a “20-25% reduction” in Tesla’s stock value. He argues that combining the entities would lead to a “conglomerate discount,” where stocks trade at the lowest common multiple.
“A TSLA/SpaceX merger is a solution looking for a problem,” Black concluded on Sunday.
TSLA Stock Price Activity: Tesla shares were down 1.80% at $365.42 at the time of publication on Friday, according to Benzinga Pro data.
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