Oppenheimer Analyzes Elon Musk’s OpenAI Bid as a Distraction from Tesla’s Ongoing Challenges

This is not investment advice. The author has no position in any of the stocks mentioned.

The Clash of Titans: Musk vs. Altman

In what appears to be an escalating feud, Elon Musk, CEO of Tesla, and Sam Altman, CEO of OpenAI, have engaged in a public war of words. Musk recently labeled Altman a “swindler, ”prompting Altman to respond by suggesting that Musk’s unsolicited bid for OpenAI stemmed from a “position of insecurity.”The situation has drawn the attention of Oppenheimer’s analysts, who offer a more rational perspective amidst this tumultuous exchange.

Analyst Insight: A Distraction from Tesla’s Challenges

Oppenheimer analyst Colin Rusch asserts that Musk’s audacious $97.8 billion proposal for OpenAI, which involves a consortium of investors, may merely serve as a diversion from Tesla’s pressing issues. Rusch commented:

“While TSLA (Tesla) has shifted focus to being a Physical AI play, we view Elon Musk’s bid for OpenAI as a distraction from TSLA’s challenges.”

Economic Implications of Musk’s Bid

Rusch strengthens his argument by highlighting that Musk’s offer reflects a 38% discount relative to OpenAI’s valuation established in its last major funding round in October 2024. He perceives a lack of “meaningful discussions”concerning Musk’s latest move, but anticipates that escalating competition in electric vehicles (EVs) and autonomous vehicles (AVs) may lead to increased risks for Tesla’s revenue estimates.

Political Activities and Consumer Sentiment

Furthermore, Rusch suggests that while Musk’s political endeavors may garner support among certain groups, they could also alienate consumers and employees. He notes:

“We also believe CEO Musk’s political activity has fans in certain circles, but that his public life risks alienating consumers and employees as the Trump administration tests the limits of its power.”

Declining Sales Trends

Citing recent data, Rusch points to troubling sales trends for Tesla. Registrations in California and the European Union continued to decline, with a significant drop of 47.7% year-over-year in January 2025. Tesla’s sales plummeted to just 5, 517 units from 10, 556 in January 2024. Additionally, in the U. S.market, sales remain constrained due to demand fluctuations and the forthcoming Model Y Juniper launch.

The Ongoing Musk-Altman Dispute

The tension between Musk and Altman intensified when Altman announced plans to transition OpenAI into a public benefit corporation (PBC), which will allow its for-profit arm to take control of its core AI functions while the non-profit retains an ownership interest. Musk, in late 2024, initiated legal action against OpenAI to halt this transition, claiming it contradicted the organization’s mission to improve humanity at large.

Public Exchanges and Allegations

In December 2024, Altman dismissed Musk’s legal grievances, branding him a “bully”who thrives on conflict. In an open letter, OpenAI emphasized that Musk had initially proposed a for-profit model for the organization in 2017 as a co-founder. The letter detailed:

“When he didn’t get majority equity and full control, he walked away [in 2018] and told us we would fail.”

Recent Developments

Following a recent online spat where Altman countered Musk’s buyout bid and proposed acquiring X/Twitter for $9.74 billion, Musk’s “swindler”remark reignited the feud. Altman further speculated that Musk’s actions likely stemmed from insecurity.

Conclusion: Anticipating Ongoing Drama

As this contentious saga unfolds, industry watchers expect additional developments in the contentious relationship between these two tech giants. It remains to be seen how this conflict will impact both OpenAI’s strategic direction and Tesla’s market performance.

Stay tuned for more updates as this situation evolves.

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