
Morgan Stanley (MS) advised to Tesla (TSLA) CEO on his purchase of $ 44 billion of Twitter (TWTR). The bank also helped secure $ 25.5 billion in financing for the deal, including $ 12.5 billion in loans that use Musk’s Tesla stock as collateral. This should lead to lucrative fees and interest income for Morgan Stanley.
Investment banks usually get about 1% to 3% cut in the value of a merger agreement, which is shared between all the banks involved. Based on the purchase price of $ 44 billion, it amounts to a range of $ 440 million to $ 1[ads1].3 billion.
So Morgan Stanley could look at taking in tens – or even hundreds – of millions of dollars from advising Musk, plus the Wall Street bragging rights.
Morgan Stanley is one of the world’s leading financial companies. According to so-called league tables tracked off Financial Times, the bank collected the second largest amount of fees from investment banking activities in the first quarter. Its $ 852 million in fees so far this year only followed Goldman Sachs, up 87% from the first quarter of 2021.
Morgan Stanley said in its first quarter results report that merger advisory revenues nearly doubled from a year ago. However, total investment bank income was held back by a decline in IPOs and corporate bond sales during the first three months for the broader market.
The bank had no comment on the company’s work for Musk or Tesla.
But it should come as no great surprise that Musk is working with Morgan Stanley. After all, he has a relationship with the company for more than a decade. And the bank was one of four underwriters for Tesla’s 2010 IPO, along with Goldman Sachs (GS), JPMorgan Chase (JPM) and the German bank (DB).
Morgan Stanley’s car analyst, Adam Jonas, is one of the biggest Tesla bulls on Wall Street. Jonas currently has a “buy” rating on the Tesla stock and a price target of $ 1300, 30% above the current stock price of approximately $ 1000 per share.
Jonas has also recently written positive reports on the prospects for two of Musk’s multi-billion dollar companies, SpaceX and The Boring Company. Jonas even suggested in 2017 that Tesla and SpaceX should merge, and recently predicted that SpaceX could eventually help make Musk a trillionaire.
So even though Musk’s takeover of Twitter does not make the company a social media game that can challenge such as Facebook and Instagram owner Metaplatforms (FB), Snapchat (SNAP) or TikTok, Morgan Stanley can still benefit from it.
Anything the investment bank does in the future to stay in Musk’s good grace can be beneficial, especially if the world’s richest person seeks advice on multiple mergers for Tesla, a listing for SpaceX or The Boring Company, or any other whim that requires him to collect more cash strikes. his fancy.
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