Tesla Motors, Inc.
) surged to an all-time high of $206 before closing at $203.70 on
Feb 18, after rumors circulated about a possible takeover by
). The rumors were a result of a report by
The San Francisco Chronicle
that Apple's mergers and acquisition chief, Adrian Perica, had a
meeting with Tesla CEO Elon Musk in Cupertino, CA in the spring
Although the nature of the discussions between the two is not
known, the report stated that the meeting suggests that Apple is
interested in buying Tesla. It also stated that Musk might have
met Apple CEO, Tim Cook, as well.
Neither company commented on the speculation. However, it is
worth noting that Musk had announced his intentions to stay with
Tesla for many years, in an interview with Bloomberg last year.
However, the Tesla's CEO seemed open to its acquisition by
While Apple and Tesla are involved in completely different
businesses, both companies are known for their innovative
products that appeal to the tech-friendly crowd. The common
target audience might make an acquisition seem lucrative as the
presence of Apple products in Tesla's car would appeal greatly to
this target group.
However, most analysts believe that collaboration between the
two companies is a more likely outcome than an acquisition.
Automobile companies have a small profit margin, which might not
appeal to Apple. Moreover, the meeting took place a long time
back. Thus, the probability of an acquisition seems low.
However, it is possible that Tesla might join forces with
Apple to incorporate the latter's operating system or
entertainment products in its cars. Apple is already in talks
with several automobile manufacturers to incorporate its
operating system, iOS, in cars.
Apart from the Apple rumor, Tesla's stock was also driven by
the expectations of an earnings beat, when the company reports
its fourth-quarter 2013 results on Feb 19. Tesla recently
revealed that vehicle sales in the quarter were 20% higher than
estimated. The company sold and delivered 6,900 vehicles in the
quarter, an improvement on its guidance of 6,000 units.
Tesla currently carries a Zacks Rank #1 (Strong Buy). Some
other stocks worth considering in the auto industry are
Dongfeng Motor Group Company Ltd
), both of which carry a Zacks Rank #2 (Buy).
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