Morgan Stanley is an enormous winner in Musk’s Twitter deal

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New York
CNN Enterprise
 — 

Even the world’s richest individual wants monetary recommendation. That’s nice information for Morgan Stanley, the funding financial institution of alternative for Elon Musk.

Morgan Stanley

(MS) suggested the Tesla

(TSLA) CEO on his $44 billion acquisition of Twitter

(TWTR). The financial institution additionally helped safe $25.5 billion in funding for the deal, together with $12.5 billion in loans that use Musk’s Tesla

(TSLA) inventory as collateral. That ought to result in profitable charges and curiosity revenue for Morgan Stanley

(MS).

Funding banks often get a couple of 1% to three% reduce of the worth of a merger deal, which is cut up amongst all of the banks concerned. Primarily based on the $44 billion buy value, that works out to a variety of $440 million to $1.3 billion.

So Morgan Stanley could possibly be taking in tens — and even lots of — of thousands and thousands of {dollars} from advising Musk, plus the Wall Road bragging rights.

Morgan Stanley is without doubt one of the world’s preeminent monetary corporations. Based on so-called league tables tracked by the Monetary Occasions, the financial institution raked within the second-largest quantity of charges from funding banking within the first quarter. Its $852 million in charges to this point this 12 months trailed solely Goldman Sachs, and was up 87% from the primary quarter of 2021.

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Morgan Stanley stated in its first-quarter earnings report that advisory income for mergers almost doubled from a 12 months in the past. However general funding banking income was held again by a slowdown in preliminary public choices and company bond gross sales throughout a rocky first three months for the broader market.

The financial institution had no remark concerning the firm’s work for Musk or Tesla.

But it surely shouldn’t be an enormous shock that Musk is working with Morgan Stanley. In spite of everything, he has a greater than decade’s lengthy relationship with the corporate. And the financial institution was certainly one of 4 underwriters for Tesla’s 2010 IPO, together with Goldman Sachs

(GS), JPMorgan Chase

(JPM) and Deutsche Financial institution

(DB).

Morgan Stanley’s auto analyst, Adam Jonas, is without doubt one of the largest Tesla bulls on Wall Road. Jonas at present has a “purchase” score on Tesla inventory and a $1,300 value goal, 30% above the present inventory value of roughly $1,000 a share.

Jonas has additionally not too long ago written optimistic studies concerning the prospects for 2 of Musk’s multi-billion greenback privately held firms, SpaceX and The Boring Firm. Jonas even instructed in 2017 that Tesla and SpaceX ought to merge, and extra not too long ago predicted that SpaceX might finally assist make Musk a trillionaire.

So even when Musk’s takeover of Twitter doesn’t flip the corporate right into a social media juggernaut that may problem the likes of Fb and Instagram proprietor Meta Platforms

(FB), Snapchat

(SNAP) or TikTok, Morgan Stanley might nonetheless profit.

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Something the funding financial institution does shifting ahead to remain in Musk’s good graces could possibly be helpful, particularly if the world’s wealthiest individual seeks recommendation on extra mergers for Tesla, an IPO for SpaceX or The Boring Firm or no matter different whim requiring him to boost more money strikes his fancy.

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