Tesla rises after Barclays upgrade highlights potential SpaceX merger

Tesla Inc (NASDAQ:TSLA) climbed 6% to $395 on Monday after Barclays upgraded the stock and raised its price target, citing a potential merger with SpaceX Corp (NASDAQ:SPCX) and improving business fundamentals.

Barclays raised their rating to ‘overweight’ from ‘equal weight’ and increased its 12-month price target to $450 from $370, implying approximately 21% upside from Friday’s closing price.

The upgrade places greater emphasis on a possible combination with SpaceX, Elon Musk’s aerospace company, after both businesses formed independent committees to explore a merger.

Musk has described a combination as a good idea but cautioned that a transaction is not guaranteed, with the committees yet to agree terms and shareholders ultimately required to approve a deal.

Analysts view the potential transaction as an additional source of upside for Tesla shareholders, with a takeover premium providing support for the shares while negotiations continue.

However, Barclays’ more positive view also rests on expectations that Tesla’s automotive business will return to growth after declines in recent years, supported by demand for its Full Self-Driving software and higher exports from Shanghai.

The energy storage business is another potential growth driver, with demand from artificial intelligence data centres helping to fill Tesla’s order book for 2027 and potentially supporting shipment growth of over 50%.

Barclays also highlighted early signs of an inflection in Robotaxi, Tesla’s autonomous ride-hailing business, as investors assess whether its self-driving technology can become a meaningful commercial operation.

Tesla’s rally contrasted with losses among smaller electric vehicle rivals, with Lucid Group falling 4% to $3.38 and Rivian Automotive slipping 2% to $11.64 during Monday’s session.

The merger remains uncertain, leaving Tesla investors weighing the prospect of a transaction premium against the company’s ability to deliver growth across its existing automotive, energy and autonomous driving businesses.