Tesla To Be Acquired By A Tech Firm This Year, NYU Professor Predicts

Shares of embattled Tesla Inc. will likely plunge to less than $100 over the next 12 months and the electric vehicle (EV) maker will fall to a tech firm such as Apple Inc. or Amazon.com, said an academician who predicted the dire straits Tesla now finds itself in.

In March, New York University professor Scott Galloway predicted this year will be the year Tesla starts going under. He made the call at the South by Southwest (SXSW) festival.

His gutsy guess rings true today as Tesla’s stock has now lost some 52% of its value from its record high in September 2017. Tesla’s stock stood at $310 on Jan. 2, 2019 and $189.86 on Wednesday.

"I think investors are finally getting fed up," he said about Tesla. "My prediction is within 12 months Tesla is sub $100 per share and it probably gets acquired because there's real value there."

Galloway also believes the four major American automakers likely won't buy Tesla for one simple reason: "They don't have the money."

He noted that most carmakers don't have the cash on hand to fork-over the tens of billions of dollars for Tesla. That only leaves cash-flush tech firms in the mix, said Galloway.

"Even if it goes from $35 billion to $17 billion ... there's maybe a couple companies that could buy it: Maybe Toyota, maybe Daimler Benz, but that's a bet the ranch kind of bet," said Galloway.

He pointed out that bids might include a premium that take the deal's value from $20 billion to $25 billion. Tesla has a current market cap of $34 billion.

Enter Apple and Amazon. Galloway noted how Apple once made a bid for Tesla. Amazon is said to have $17 billion in cash to buy Tesla if it wants to.

"The guys that could acquire it, that have the balance sheet, are the tech companies but they don't want to go into a low-margin business," according to Galloway. "So would Google start to see the car as a platform for more advertising maybe?"

Harried by non-stop noise prophesying its impending doom, Tesla on Wednesday saw its stock close with a 1.16% gain at $189.86. The stock stood at $187.02 per share in Wednesday’s premarket and opened at $187.10.

The modest improvement, however, is seen by some analysts as a brief respite for a stock that’s lost close to 52% of is value from its record high and is expected to keep losing value even as it strives to meet production targets. The current plunge is the stock’s sharpest downturn since the 2010 IPO.

The stock is less than 4% from sinking to $180, a level it’s not hit since November 2016. The stock fell below $200 for the first time since December 2016 during intraday trading on May 27.