JPMorgan doesn’t believe Tesla has the funding secured to go private

The bank has lowered its price targets for the electric car company

Tesla Model 3 red and grey

On August 7th Elon Musk tweeted that he has plans to take Tesla private at $420 a share.

Since then there have been numerous reports that Musk didn’t have the funding secured to make this happen. Now investment bank JPMorgan is casting its own doubts on the electric car manufacturer’s claims.

The bank cut its price targets for Tesla by $113 USD on August 20th. Tesla’s previous price target was sitting at $308 — now it’s only $195.

Shortly after Musk’s tweets on the 7th, the bank raised Tesla’s price target from $198 to $308. This was based on the surge in Tesla stock because of the tweets.

The cuts are in reaction to the high levels of scepticism surrounding Musk and Tesla. Since Musk first announced he was taking Tesla private, the SEC has started an investigation into the company, and then Musk shared a statement announcing that the funding for the privatization was based on potential funding, rather than actual secured funding.

Reuters reported that people close to the matter have said that the Saudi investment fund that was looking to invest in Tesla is also looking at Lucid Motors, a relatively newer electric car company.

“Tesla does appear to be exploring a going private transaction, but we now believe that such a process appears much less developed than we had earlier presumed, suggesting formal incorporation into our valuation analysis seems premature at this time, ” said JPMorgan analyst Ryan Brinkman in a client note originally reported by Reuters.

The company’s stock has been trending downwards in the aftermath of the situation and at of the time of writing this story, it sits at $299.83 USD.

This is quite a fall from the $379.57 it hit on the 7th.

Source: Reuters