Barclays upgrades Tesla stock rating on business momentum, SPCX deal

Barclays upgraded Tesla's stock rating to Overweight, raising its price target to $450 from $370. This upgrade comes from the firm's observation of improved core business performance and a potential SPCX combination. The higher target suggests approximately 21% upside from Tesla's current stock price of $372.22. However, Tesla trades at a high P/E ratio of 409.

A recent focus in discussions surrounding Tesla has been a potential merger with SPCX, which CEO Elon Musk confirmed on their earnings calls. Barclays anticipates this merger will likely include a premium to Tesla's stock price. The company's auto business is projected to grow this year after two years of decline, with further upside expected in 2027 due to demand from FSD and rising exports from Giga Shanghai.

Meanwhile, Tesla's Energy business is almost fully allocated for 2027 due to data center demand, which Barclays believes could lead to shipments exceeding 50%. The firm also noted Tesla's Robotaxi business showing signs of inflection after a sluggish start following the June 2025 launch. There has been a significant increase in Robotaxi miles driven and FSD uptake, reaching over 75% on newly bought Teslas in North America in the third quarter.

Barclays sees this improvement in Tesla's core business, Robotaxi inflection, and the potential premium from an SPCX merger as offering an attractive risk/reward for the stock. However, InvestingPro analysis suggests Tesla is currently overvalued based on its Fair Value assessment. Overall, Barclays believes the combination of Tesla's improved business performance, Robotaxi inflection, and the potential SPCX merger presents an attractive investment opportunity.