Analyst revisits Tesla stock rating as Musk targets OpenAI takeover

OpenAI, co-founded by Musk in 2015, could be worth as much as $300 billion.

Feb 11, 2025 - 13:10

Analyst revisits Tesla stock rating as Musk targets OpenAI takeover

Tesla shares extended their recent run of declines Tuesday amid what could be another potential distraction for CEO Elon Musk as the world's richest man as renews his long-running feud with OpenAI founder Sam Altman.

Musk, who co-founded OpenAI with Altman in 2015, unveiled a surprise and unsolicited $97.4 billion bid for the non-profit group now back by Microsoft (MSFT) late Monday, saying he wanted to return it to “the open-source, safety-focused force for good it once was".

The Wall Street Journal reported that the bid is backed in part by Musk's own xAI startup, which he would merge with OpenAI if a deal were to be completed.

OpenAI was last valued at $157 billion, based on a 2023 funding round, and is current in talks with Japan's SoftBank for a $40 billion investment that would value it at around $300 billion.

Musk has stated many times in the past that AI technologies will prove crucial, if not essential, to Tesla's (TSLA) future growth, which is predicated on delivering fully autonomous vehicles at scale.

Altman, however, quickly rejected Musk's approach and accused his former friend of attempting to slow OpenAI's progress by complicating its conversion from a non-profit entity as it seeks funding from myriad investors around the world.

Elon Musk and Sam Altman co-founded OpenAI in 2015, but have since feuded over its non-profit status and Altman's growing influence in the political space.
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“I think he is probably just trying to slow us down. He obviously is a competitor,” Altman told Bloomberg Television on the sidelines of an AI event in Paris Tuesday. “I wish he would just compete by building a better product, but I think there’s been a lot of tactics, many, many lawsuits, all sorts of other crazy stuff, now this.”

Musk v Altman: round three

Altman was referring to a lawsuit filed by Musk last year that alleges OpenAI's non-profit structure is really just a front for its for-profit ambitions.

Last month, in fact, Musk told a California court that the Federal Trade Commission's probe into Microsoft's $13 billion stake and 49% profit-sharing agreement with OpenAI essentially supports his complaint.

Musk also made public comments challenging OpenAI's planned $100 billion joint venture with Oracle (ORCL) and SoftBank, unveiled by President Donald Trump last month, saying that Japan's investment group "doesn't actually have the money".

“SoftBank has well under $10B secured. I have that on good authority," he added in a separate message on his verified X social media account.

Musk himself, however, could struggle to put the collective funding for a full OpenAI bid together, even with his status as the world's richest man.

LSEG data estimates his Tesla shares are valued at around $165 billion, but various pledges against his $44 billion purchase of Twitter in 2022 likely mean much less would immediately be available.

DOGE ambitions tests commitment

The larger question for Musk, however, and indeed Tesla shareholders is whether his time is best spent on a protracted battle with Altman and OpenAI.

Musk's role as the head of President Donald Trump's efficiency drive has placed him at the forefront of the new administration's news cycle, and his pledge to find $2 trillion in savings, with a small team of inexperienced supporters, is likely to require hundreds if not thousands of hours until the end of the government's fiscal year in September.

His other business ventures, including SpaceX, are also growing increasingly critical for Musk's overall empire, particularly given the fact that Tesla's vehicle-selling metrics have weakened.

Tesla posted its first-ever annual sales decline last year, and its fourth quarter earnings indicated a further erosion in profit margins tied to lost market share in China, slumping EV demand and a global price war.

Tesla distraction for Musk?

"While Tesla has shifted its focus to positioning as a Physical AI play, we view Elon Musk's bid for OpenAI as a distraction from Tesla's core challenges [while] the bid, coming at a 38% discount to OpenAI's October 2024 capital raise, is unlikely to lead to meaningful discussions," said Oppenheimer analyst Colin Rusch.

"We see increasing risks to Street estimates for Tesla as competition in the EV and AV markets continues to intensify," added. Rusch, who reiterated his 'perform' rating for the stock in a note published Tuesday.

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"Additionally, we believe CEO Musk's political activity resonates with certain audiences but risks alienating consumers and employees, particularly as the Trump administration tests the limits of its power," Rusch said.

Tesla shares were last marked 0.5% lower in premarket trading to indicate an opening bell price of $348.91 each. The stock, however, has fallen more than 26% since its all-time peak in late December, shedding nearly $300 billion in value along the way.