Tesla is no longer rated by Goldman Sachs as bank takes on advisory role

Goldman Sachs Group Inc. has stopped covering Tesla Inc. stock as the investment bank is acting as a financial adviser in the company’s going-private talks.

In a Wednesday note, Goldman did not specify the nature of its advisory role in the Tesla TSLA, -2.57%  going-private plans, saying only that it was acting as a financial advisor “in connection with a matter that is fundamental to the reasonable analysis of the rating and price target for this stock.”

Tesla shares fell more than 3% on Wednesday, hovering at their lowest in two weeks and around 20% off the $420 share price announced by Chief Executive Elon Musk last week when he tweeted he had funding “secured” to take Tesla private.

That tweet is now the focus of a securities probe, while investors seem doubtful a deal will happen despite a blog post by Musk expanding on his goal and detailing meetings with Saudi Arabia’s sovereign-wealth fund.

The “not rated” status will continue until “sufficient information is available, and/or contingencies appear resolved, to allow such analysis, the note said. Goldman will continue to provide its earnings estimates on Tesla, it said.

Before Wednesday’s decision, the Goldman Sachs analysts, led by David Tamberrino, were among the more bearish and critical of Tesla on Wall Street.

The analysts had a sell rating on the stock and a six-month price target of $210, or about 40% below Wednesday’s share price. By comparison, analysts on average have a $331 price target on Tesla, according to FactSet.

In their latest available note, a day after Musk stunned markets with his going-private plan, the Goldman analysts said they took “no view” on the outcome of the announcement, but went on to question the proposal.

Musk again surprised markets late Monday, tweeting he was working with Goldman and Silver Lake plus prominent law firms in his going-private quest.

Since then, however, several news reports have raised questions about how official such ties were, including one report in The Wall Street Journal that claimed that Goldman Sachs executives were still haggling over the terms of engagement as late as Tuesday.

Tesla shares are holding on to a 9% gain this year, compared with advances of 5.6% and 1.5% for the S&P 500 index SPX, -0.76%  and the Dow Jones Industrial Average DJIA, -0.54%  in the same period.