Barclays Makes Bold Tesla Stock Call After SpaceX Twist

This article first appeared on GuruFocus.

Tesla (NASDAQ:TSLA) stock jumped roughly 6% Monday after Barclays upgraded the electric vehicle giant, arguing that its upside potential extends well beyond a possible merger with Elon Musk’s SpaceX (SPCX). The investment bank sees improving vehicle sales, booming energy storage demand, and growing robotaxi operations strengthening Tesla’s investment case even without a blockbuster deal.

Barclays analyst Dan Levy upgraded Tesla to Overweight from Equal Weight, raising his price target to $450 from $370, a roughly 22% increase.

The revised target implies approximately 21% upside from Tesla’s October 23 closing price of $372.22.

While a potential SpaceX combination could provide an additional premium, Levy believes investors may be overlooking improvements in Tesla’s underlying businesses.

We believe the narrative on TSLA stock should not only be about the potential combinationwe’d argue TSLA’s recent earnings call showed a number of key positions that can also support strength for the stock, Levy wrote.

The analyst expects Tesla’s automotive business to return to growth in 2026 after two years of declines, with additional momentum next year from Full Self-Driving adoption and exports from its Shanghai factory.

However, its energy division may be the more intriguing catalyst.

Tesla recently reported 13.7 gigawatt-hours of energy storage deployments in the third quarter, with segment gross margins reaching 33.1%.

With capacity reportedly nearly sold out for 2027 amid strong data center demand, Levy sees energy shipments increasing more than 50%.

What investors should watch next

For Tesla shareholders, three developments will determine whether Barclays’ optimism translates into sustainable upside.

First, investors should monitor vehicle deliveries and automotive margins to assess whether the anticipated recovery is materializing.

Second, energy storage deployments and segment profitability will be crucial in validating expectations for rapid growth.

Third, robotaxi expansion, paid FSD adoption, and any formal SpaceX merger proposal could materially influence Tesla’s valuation.

A combination remains uncertain and would face shareholder approval requirements.

Ultimately, Tesla’s ability to convert autonomous driving and energy demand into profitable growth could prove more important than merger speculation alone.