Tesla Stock Gains After Morgan Stanley Stops Coverage

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Elon Musk, co-founder and chief executive officer of Tesla Motors Inc., attends a key delivery ceremony of the company’s premium electric sedan Model S vehicles to customers in Tokyo, Japan, on Monday, Sept. 8, 2014. Tesla may partner with Toyota Motor Corp. again in the future, Musk said. Photographer: Yuriko Nakao/Bloomberg via Getty Images

Morgan Stanley (NYSE: MS), has become the second firm which has decided to stop Tesla Inc., (NASDAQ: TSLA) stock coverage. First to ban the coverage of the electric-car manufacturer’s stock was Goldman Sachs Group Inc. (NYSE: GS). Earlier, Elon Musk, CEO of Tesla, tweeted that he has secured funds to buy the company and this has created a huge uproar among the investors.

When asked, why they removed Tesla’s rating and price target, Goldman Sachs responded saying that it would explain the reason to Elon Musk himself. However, the reasons for Morgan Stanley banning Tesla stock coverage remain unclear.

Morgan Stanley’s reluctance to explain as to what prompted the move has led to a wide spread speculation that the firm, probably, might have a role to play in Musk’s decision to buy out Tesla.

These speculations have helped Tesla stock to see its biggest gains since August 7, the day when Musk first tweeted that the funds were secured to help “Tesla go private.”  Tesla’s shares climbed as much as 5.3% yesterday, and stood at 4.4% at the end of the session, taking the share price to $321.90 in NYSE.

Two weeks ago, in a surprise tweet, Musk has stated that he was planning to take Tesla by buying out some of its investors’ shares at a price of $420 per share and he has already secured the required funding to do so. Tesla’s board later clarified that it did not receive any such offer from Musk.

On the other hand, the investor from Saudi Arabia’s sovereign wealth fund, whom Musk has described as the key player in making the move, is reportedly considering of investing in a different electric-car company which is also based in the U.S.    

Rallies aside, the confusion circling around Musk’s efforts of buying Tesla is making the best of Tesla’s believers to lose faith in the company.

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