Barclays Upgrades Tesla to Buy, Lifts Target to $450 on Merger Hopes and FSD Demand

Barclays analyst Dan Levy upgraded Tesla (TSLA) to Buy from Neutral on Monday, raising the price target to $450 from $370, citing expectations that a potential merger with SpaceX would lift the stock. Levy wrote that the market widely expects the two companies to combine and that Tesla shares could command a premium, which he said would drive the stock higher. Tesla and SpaceX CEO Elon Musk recently confirmed both boards are evaluating a merger that would create an AI giant spanning foundation models and hardware such as humanoid robots. Levy also pointed to improving core operations, ending a growth stall in 2024-2025. He expects the auto business to return to growth this year, ending two consecutive years of decline, with further improvement in 2027 driven by Full Self-Driving demand and higher exports from the Shanghai Gigafactory. Tesla reported 1.74 million FSD users at the end of the third quarter, up from 1.04 million a year earlier, with about 75% of new buyers subscribing at $99 a month. Sales are up roughly 13% this year, but operating profit has fallen about 30%, and the stock was down about 17% year to date before Monday's open. According to FactSet, 49% of analysts covering Tesla now rate it Buy, versus a 55%-60% average for S&P 500 components, with an average target price of about $415.