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Another Wall Street bank has dropped coverage of Tesla — and it could be a sign Elon Musk is making progress in taking the company private (TSLA)

Graham Rapier
Adam Jonas

CNBC via Yahoo Finance


Morgan Stanley has dropped its research overage of Tesla in what could be another sign that Elon Musk's electric-car company is tapping banks for financial services in its bid to go private. It could also mean the bank's analyst has left the firm. 

Goldman Sachs dropped coverage last week and said 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."

Morgan Stanley declined to comment. Tesla did not immediately respond to a request for comment.

The bank's autos analyst, Adam Jonas, is known for producing some of Wall Street's more entertaining research reports on everything from a potential SpaceX-Tesla merger to a breakup of General Motors. Until recently he was a major Tesla bull; his price target had been as high as $379 before he cut it to below $300 in recent weeks. Bloomberg data showed Tuesday that Morgan Stanley had restricted its coverage.

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.

Musk has come under fire from other equity analysts over a tweet in which he suggested, seemingly incorrectly, that there was "funding secured" for a deal to take Tesla private. JPMorgan on Monday cut its price target for Tesla shares to $195 from $308, saying "funding appears to not have been secured."

Tesla's stock price has whipsawed in the two weeks since Musk sent out that tweet, in which he also suggested the company would go private at $420 a share. After initially skyrocketing to $389 —near record highs — shares briefly fell back below $300 on Monday following a slew of securities-fraud lawsuits and a reported subpoena from the US Securities and Exchange Commission.

Shares were up about 1.7%, to $312, on Tuesday morning.

Read more about Tesla's bid to go-private:

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Tesla stock price morgan stanley restricted coverage

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