Barclays Upgrades Tesla to Overweight, Lifts Target to $450 on Potential SpaceX Merger

Barclays upgraded Tesla (TSLA) to Overweight from Equal Weight on Monday and raised its price target to $450 from $370, incorporating a "strategic premium" from a potential Tesla-SpaceX merger into its valuation model rather than relying on traditional auto-cycle metrics. CEO Elon Musk confirmed on SpaceX's earnings call last Tuesday that both companies have formed independent special board committees to evaluate a merger, though deal structure and exchange ratio remain undecided. Analyst Dan Levy said the combined entity would respond more nimbly to the software-defined vehicle transition and create vertical synergies across autonomy, robotics and space computing; Barclays sees an all-stock SpaceX acquisition of Tesla with a merger premium as the most likely path. Tesla's Q3 results showed 1.74 million active FSD users, up 67% year-over-year, with North American new-vehicle attach rates above 75%. Automotive revenue still exceeds 70% of the total, but high-margin software and energy storage—nearly sold out through 2027 on AI data center demand—are the profit drivers Wall Street is watching. Risks include Tesla shareholders absorbing SpaceX's AI and aerospace capital spending, and uncertainty over Terafab chip production, which Musk targets for 2028 but analysts warn could slip to 2030. Polymarket traders price a 15% chance of a formal announcement by end-2026, rising to 63% by end-2027.