Key Morningstar Metrics for Tesla
- Fair Value Estimate: $400.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
SpaceX announced it acquired xAI, allowing the two companies to move forward as one to develop space-based data centers. Tesla TSLA shares were down 2% on Feb. 2 on the news.
Why it matters: The merger likely rules out Tesla acquiring SpaceX in the near future. Last week, Bloomberg reported that SpaceX had been evaluating a deal with Tesla in addition to xAI. Instead, we expect SpaceX will proceed with an initial public offering later this year.
- Tesla CEO Elon Musk remains the largest shareholder of SpaceX, so we don’t rule out Tesla eventually acquiring the firm. Rather, we think SpaceX going public may lead to less regulatory scrutiny if Tesla were to acquire SpaceX in the future, as shareholders of both companies could vote on the deal.
- Further, Musk has said that he sees Tesla, SpaceX, and xAI’s businesses converging in the future, so we think a deal could still occur. Tesla vehicles are currently using xAI’s Grok large language model, and we see additional opportunities for Tesla and SpaceX to work together.
The bottom line: We maintain our $400 fair value estimate for narrow-moat Tesla. We had not previously assumed a deal with SpaceX would occur, so our outlook doesn’t change on this news.
- At current prices, we view Tesla shares as fairly valued, with the stock trading a little above our fair value estimate and in 3-star territory.
- We see no change to our outlook. The company is in the early stages of a transition from selling autos as its primary business to real world artificial intelligence, including autonomous driving software and humanoid robots.
