TSLA Stock Back To $400? Jefferies Lays Out Bull Case, Says ​​SpaceX Merger Could Hand Shareholders A Premium

• The brokerage raised Q2 EBIT to $1.45 billion but still expects a $7.5 billion free cash flow outflow.
• Jefferies said that a Tesla-SpaceX merger could leave room for a shareholder premium, with Musk retaining 55.3% voting control.
• Tesla’s Semi will enter a pilot in Chicago with Paper Transport to test its 500-mile range in colder conditions.

Shares of Tesla, Inc. (TSLA) rose 0.2% in overnight trading late Monday as Jefferies raised its price target and said that a potential SpaceX merger could leave room for a shareholder premium.

TSLA stock fell 3% on Monday, snapping two straight sessions of gains. 

Jefferies Lifts TSLA Outlook Ahead Of Q2 Earnings 

Jefferies raised its Tesla price target to $400 from $375 while maintaining a ‘Hold’ rating, implying a modest 1% upside from current levels. The firm cited Tesla’s “significant auto volume beat” after the company delivered 480,100 vehicles in the second quarter, well above the consensus estimate of 406,000. Model 3 and Model Y vehicles accounted for 467,800 deliveries. The brokerage said that the strength in China and Europe validated the “unique value proposition of Tesla vehicles,” even as the broader auto industry faces a growing risk of commoditization.

The brokerage also said that Tesla’s multi-year deterioration in growth and earnings had started to reverse. Jefferies raised its second-quarter (Q2) earnings before interest and taxes (EBIT) forecast to $1.45 billion, representing a 5.1% margin, and increased its longer-term EBIT estimates by about 6%. Tesla is set to report its Q2 earnings on July 22. 

The firm now expects automotive revenue of $21 billion, including $250 million from zero-emission vehicle credits and $500 million from leasing. Group revenue and EBIT are projected at $28.7 billion and $1.45 billion, respectively. For fiscal 2026, Jefferies raised its EBIT estimate by 4% to $6.2 billion, partly reflecting stronger volumes and the higher-priced long-wheelbase Model Y.

Jefferies also expects Q2 capital spending of $6.9 billion, leaving Tesla with $41.7 billion in liquidity. Deliveries running ahead of production should also provide a near-term cash-flow benefit by reducing inventory.

However, Jefferies maintained its forecast of about $7.5 billion in free cash flow outflows, including $23 billion in capital expenditures. It also struck a cautious note on autonomy, saying low implied Cybercab production pointed to further delays in Tesla’s robotaxi ramp.

Tesla-SpaceX Merger Thesis Gains Steam

The debate over a potential Tesla–SpaceX merger has evolved beyond retail speculation. What began as prominent retail investors modeling ownership structures and exchange ratios has now drawn institutional attention, with firms such as Jefferies and JPMorgan publishing analytical frameworks that examine voting control, governance implications, and potential merger-premium structures.

Jefferies said it continues to see logic in merging Tesla with Elon Musk’s privately held space company. Under a nil-premium deal, Musk would retain an estimated 55.3% voting stake in the combined entity. The structure, Jefferies said, could leave room for Tesla shareholders to receive a premium.

The argument adds to growing Wall Street interest in whether Musk could eventually bring his automotive, AI, energy and space businesses closer together. JPMorgan recently called a Tesla-SpaceX merger “strategically coherent on paper,” pointing to potential integration across AI, robotics, energy, transportation and space. It maintained a ‘Neutral’ rating.

Tesla Semi Enters Chicago Pilot

Separately, Tesla’s Semi is entering a new pilot program with Wisconsin-based Paper Transport. Paper Transport will test the long-range truck in dedicated Chicago operations, giving Tesla another opportunity to assess its performance in colder temperatures and snow-heavy conditions. The configuration offers about 500 miles of range and is priced at $290,000. Tesla has previously conducted Semi fleet trials with PepsiCo and Frito-Lay.

How Do Retail Traders Feel About TSLA?

On Stocktwits, retail sentiment for TSLA was ‘bullish’ amid a 396% jump in 24-hour message volumes.

One user said, “$TSLA 390 has been holding for last couple days. earnings coming up. give me 450.”

Another user said, “I actually feel better that Tesla isn't going parabolic heading into next week's earnings. Trading below $400 keeps the stock in a healthier range, and a strong earnings call or Elon Musk's commentary could spark a short squeeze.”

So far this year, Tesla's stock has lagged its "Magnificent Seven" peers, making it the group's second-worst performer, down 12%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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