Morgan Stanley stops research coverage of Tesla

Elon Musk

Elon Musk

Goldman Sachs dropped its coverage of Tesla last week shortly before confirming it was acting as a financial adviser on a matter related to the automaker.

Tesla Inc.'s (TSLA.O) drama took a new turn when Morgan Stanley removed its rating and price target on the stock, a turnabout from analyst Adam Jonas's longtime bullishness on the electric-car maker.

Tesla Inc shares fell almost 4 per cent on Monday as a $113 cut in JPMorgan Chase's price target for the electric carmaker added to growing doubts among market players about a plan to take the company private.

Musk had tweeted early last week that he was working with buyout firm Silver Lake and investment bank Goldman Sachs as advisers in his efforts to secure tens of billions of dollars in funding and take the vehicle maker private.

Morgan Stanley didn't elaborate on the reasons for its move, and Tesla and Jonas didn't immediately return voicemail and email messages seeking comment.

PIF, the Saudi sovereign wealth fund on whom Tesla founder Musk had reportedly pinned his hopes as an investor to help take Tesla "private" is now said to looking to put money into rival electric vehicle startup Lucid Motors.

Trond Grande, deputy CEO of the Norwegian fund, declined to say whether Tesla had approached the fund about going private.

The saga started two weeks ago with Musk's bombshell tweet saying that he was planning to buy out some Tesla investors at US$420 a share and had secured funding.

Separately, Musk, a prolific Twitter user with 22.4 million followers, deleted his Instagram account, which had about 8 million followers. An interview with the New York Times, in which Musk said he was under major emotional stress in the "most hard year" of his life, on Friday added to investors' concerns over his leadership after a series of social media spats.

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