TSLA Stock Lifts a Second Day as Barclays Upgrade Ties a SpaceX Merger to the Bull Case

Tesla stock is up a second day, and the driver is the merger that has hung over the shares all week. In Tuesday trading Tesla (TSLA) was trading at about $406.55, up 3.81 percent, as of 17:05 UTC on October 27, per Yahoo Finance data. That adds to a 5.2 percent jump on Monday, October 26, when the shares closed at $391.62 and outpaced a 0.7 percent gain for the S&P 500. The two-day move is the market pricing one catalyst: a Barclays upgrade that made a possible Tesla and SpaceX combination the center of the bull case.

The move flips the previous week's read on the same two names. On October 22 Tesla fell about 1.5 percent after reporting third-quarter earnings in which net income dropped 42.7 percent. On October 23 SpaceX shares fell 9 percent to $144.75 as artificial-intelligence spending concerns and Tesla merger talk weighed, per our October 22 and October 23 coverage. What changed since is a ratings move: Barclays on October 26 raised Tesla to Overweight from Equal Weight and lifted its price target to $450 from $370, a call it made almost entirely on merger expectations.

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Related reading: Tesla Stock Falls About 1.5% After Q3 Earnings: Net Income Drops 42.7% and Spacex stock falls 9% to $144.75 as AI capex bill and Tesla merger talk weigh.

Analyst Dan Levy wrote in a note to clients on October 26 that a combination is the reason to own the stock. “The recent dialogue around Tesla has skewed heavily to a potential combination with SpaceX,” Levy wrote. “With a combination heavily expected, and with expectation for some premium to TSLA stock, we believe this should drive upside for the stock,” Levy wrote. Elon Musk said last week that a Tesla and SpaceX merger would be a good idea, adding that committees at both companies had been formed to discuss a potential combination.

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Levy also pointed to the underlying businesses. The auto business is on track to grow this year after two years of declines, with 2027 upside supported by full self-driving demand and rising Giga Shanghai exports, he wrote, while the Energy business is nearly sold out for 2027 given data center demand, which he said could support shipment growth above 50 percent. The robotaxi fleet has seen a sharp inflection in miles driven, giving Levy confidence Tesla can challenge Waymo. Catalysts beyond the merger are stacking up: Latvia approved Tesla's full self-driving software, the tenth European Union country to do so, and management said more than 75 percent of cars delivered in North America in the quarter came with a paid FSD subscription, taking paid FSD customers past 1.7 million worldwide. Management said it expects full approval across Europe and many other countries, while noting the timing is not in its control.

The market is treating the two-day move as the start of the repricing, not the whole one. The $450 target implies about 21 percent upside from Friday's close, per CNBC. Of the 49 analysts covering Tesla, 25 hold a buy or strong buy rating and 22 a hold, according to LSEG data cited by CNBC. Even after Monday's close, Tesla traded at 12.3 times trailing-twelve-month sales versus 3.2 times for the S&P 500, a premium the market is pricing before any deal premium is actually in hand, per Trefis.

The skeptical read is that the premium is an expectation and nothing has closed. The two companies have exploratory committees, not a deal, and management has said merger timing is not in its control. Tesla remains down about 12.9 percent for 2026 while the S&P 500 is up 12.8 percent, per Trefis, and Monday's close of $391.62 was still 20 percent below the shares' best close of the past year at $489.88 on December 16, 2025. The counterpoint to the rally is that a third-quarter print showing net income down 42.7 percent is the most recent reported reality, and a valuation above twelve times sales leaves little room for execution slippage.

Who this reaches is anyone holding the stock outright or through an index fund, plus option traders pricing a takeout premium into the shares. It reaches holders of SpaceX paper as well, through the prospect of any premium to Tesla stock in a combination. The number to watch is the paid FSD customer count, the measure management keeps returning to, ahead of Tesla's fourth-quarter report now expected in January 2027. Whether the exploratory committees turn a good idea into a proposal is the event that would move the story from expectation to valuation.

Disclosure: This content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Consult a qualified financial advisor before making investment decisions.