Even the richest man in the world needs financial advice as he acquires one of the largest social networks in the world. Of course, this is great news for Morgan Stanley, the investment bank that billionaire Elon Musk has chosen to advise on the Twitter acquisition.
Morgan Stanley has advised Tesla CEO on acquisitions Twitter for $44 billion. This is also the bank that helped secure a $25.5 billion loan to close the deal, including a $12.5 billion loan that the Tesla shares used as collateral by the billionaire. This will help Morgan Stanley make money from advisory fees and loan interest.
Investment banks typically receive between 1% and 3% of the value of a merger, which is then split among all banks involved. Based on the $44 billion purchase price, that would be somewhere between $440 million and $1.3 billion. Therefore, Morgan Stanley can make tens, even hundreds of millions of dollars advising billionaire Musk.
Morgan Stanley is one of the world famous financial institutions. After evaluating Financial Times, Morgan Stanley earned the second-largest investment banking fee in the first quarter. The bank’s $852 million in advisory fee revenue since early 2022 trails only Goldman Sachs so far and is up 87% year over year. with the first quarter of 2021.
In its first-quarter earnings report, Morgan Stanley said its revenue from M&A advisory services nearly doubled year over year. However, overall investment banking revenues were hurt by the slowdown in initial public offerings (IPOs) and corporate bond sales in the first three months of the year.
Not surprisingly, the Tesla CEO worked with Morgan Stanley on the Twitter acquisition. Elon Musk actually has a more than 10-year relationship with this financial institution. This is also one of four underwriters for Tesla’s IPO in 2010, along with Goldman Sachs, JPMorgan Chase and Deutsche Bank.
Adam Jonas, an analyst at Morgan Stanley, is one of the most optimistic Wall Street investors for Tesla. Jonas currently has a “buy” rating on Tesla stock with a price target of $1,300, 30% above the current price of $1,000. He also recently spoke positively about the prospects of two of Musk’s multi-billion dollar companies, including SpaceX and The Boring Company. In 2017, he even suggested merging Tesla and SpaceX. Jonas Predicts SpaceX Could Eventually Make Musk A Billionaire With A Trillion Dollar Net Worth
Even if Musk could take over Twitter but not make it a major competitor like Facebook, Instagram, Snapchat, or TikTok, Morgan Stanley could still benefit.
Whatever the investment banker does with Elon Musk going forward will be in his favor, especially if the richest man in the world needs advice on a Tesla merger, an IPO of SpaceX or The Boring Company, or some other idea that forced him to to collect more money.