Tesla stock jumps 5.2% as Barclays upgrades to Overweight with a $450 target, citing a possible SpaceX merger

Tesla shares jumped on Monday, October 26. The stock closed at $391.62, up 5.2% or $19.40, after Barclays analyst Dan Levy moved his rating to Overweight from Equal Weight before the market opened. He also lifted his price target to $450 from $370. The main reason he gave was not a new car or a robotaxi milestone, but the possible combination of Tesla and SpaceX. That is a bold bet, because no deal exists yet.

Why is Barclays betting on a SpaceX merger?

Because it sees both upside and a safety net. Levy now treats a Tesla-SpaceX merger as close to a given and called it a key part of the bull case for the stock. On the upside, Tesla holders could be offered a premium if SpaceX ends up buying the company. On the downside, he expects the stock to be better protected, because investors are less likely to bet against a company while a takeover could be announced at any moment.

How would a Tesla-SpaceX deal work?

Most likely as an all-share purchase by SpaceX. Barclays expects SpaceX to be the buyer, partly because of its dual-class share structure. According to the bank, Musk owns roughly 48% of SpaceX and controls about 82% of its votes. He has said he wants his Tesla stake to grow to around 25% from about 20%. At the $450 target and SpaceX's current share price, Barclays estimates Musk could end up with about 53% of the voting power in a combined company.

Is the merger the only reason for the upgrade?

No, Levy also sees progress in the core business. He stressed that the case should not rest on a deal alone, and pointed to several positives from last week's earnings call:

• Cars: he expects deliveries to grow this year after two years of decline, with more upside in 2027 from FSD demand and higher exports from Giga Shanghai.
• Energy: Barclays describes the energy business as almost sold out for 2027 thanks to data-centre demand, and thinks shipments could grow by more than 50%.
• Robotaxi: he sees a sharp rise in Robotaxi miles driven over recent weeks, after a slow start.
• FSD: more than 75% of newly bought Tesla cars in North America came with Full Self-Driving (Supervised) in the third quarter.

So the story has two legs.

How did investors react?

With heavy buying. About 53 million shares changed hands, roughly 47% more than the 30-day average. During the day the stock briefly traded above $397. The move outpaced the wider market, with the Nasdaq up 0.8% and the S&P 500 up 0.7%. Even after the jump, Tesla remains about 21% below its 52-week high of $498.83, and it is still down for 2026 as a whole.

The $450 target sits well above the analyst consensus of about $409, according to figures cited by Yahoo Finance. BNP Paribas also updated its view on Tesla on Monday, while flagging the company's years of heavy spending as a risk.

What could block a merger?

Above all, the shareholder vote. No deal exists yet. Both boards have set up special committees of independent directors to study a combination, and Musk has said he cannot take part in those talks because he is conflicted. A recent SpaceX filing added that any merger would still need his approval as controlling shareholder.

Barclays itself calls the approval process a high hurdle. A merger would need the backing of more than 50% of each company's total outstanding voting power, not just of the votes cast. Yahoo Finance notes that at the turnout of Tesla's 2025 meeting, about 74%, that would mean winning roughly two-thirds of the votes actually cast. In 2025, a proposal to scrap Tesla's supermajority rules won a majority of votes cast but only about 39% of all shares.

Valuation is another point to keep in mind. Tesla's operating margin was 2.6% in the third quarter, down from 5.8% a year earlier, while research spending rose sharply. Measured against expected earnings, the stock now trades at more than 180 times, well above its own five-year average.

What should investors watch for next?

Three things: the deal terms, other analysts and the core business.

• Whether the special committees agree on terms, and how big a premium, if any, Tesla holders would get.
• Whether other analysts follow Barclays in building a merger into their price targets.
• Robotaxi growth, energy deliveries and FSD take-up, which Barclays says must hold up even without a deal.

This article is for information only and is not financial advice.