Tesla stock (NASDAQ: TSLA) opened Wednesday's trading session at $381, a day after plunging nearly 6% on Tuesday. The leading EV manufacturer has been on the back foot this year, with prices sliding as sales weaken across the globe. Adding to the strain, Tesla overstated its full self-driving safety data to European regulators and is now facing regulatory scrutiny that amounts to misleading marketing.
Pressure Mounts in Europe
Traffic safety regulators in Sweden and the Netherlands are turning up the heat on Tesla over the matter and are closely examining the carmaker's safety norms. The inflated safety figures handed to European regulators are weighing on the stock's outlook. Taken together, these issues are clouding TSLA's prospects and stalling its momentum on the charts. Even so, investment banking firm Baird told clients in a note that Tesla could soon merge with SpaceX, a move that would strengthen its outlook.
A $522 Price Target
Baird's note to clients said a merger is more likely to happen 'sooner' than 'later'. The bank's analysts reiterated their Outperform rating with a buy call on Tesla stock and held their price forecast for TSLA at $522, their most bullish projection. That implies an uptick and return on investment (ROI) of roughly 37% from the current price of $381. In other words, a $1,000 investment could grow into $1,370 if the forecast proves accurate.
A Big Bet on the Merger
The note also confirmed that Baird continues to buy Tesla stock with company-specific catalysts ahead. The investment bank is betting big on a Tesla and SpaceX merger and is accumulating TSLA for clients. That makes the carmaker a must-watch equity, with the firm expecting a rise. If the two companies do combine, traders could end up holding the best of both worlds, which is why taking an entry position now could prove beneficial.
