Speculation is mounting among investors and analysts about a possible merger between Elon Musk’s two public companies, Tesla and SpaceX, following the rocket company’s blockbuster IPO that valued it at over a trillion dollars more than Musk’s electric vehicle manufacturer.
Business Insider reports that the question of whether Tesla and SpaceX will merge has become a hot topic among investors as SpaceX’s market value soared past the electric vehicle giant following an $85 billion IPO on Friday. The rocket company is now worth over one trillion dollars more than Tesla, prompting widespread discussion about whether Musk might consolidate his business empire by combining the two companies into a single conglomerate spanning rockets, electric vehicles, AI, and social media.
SpaceX president Gwynne Shotwell did not dismiss the possibility of a merger when asked about it as the company prepared to go public. “That might make Elon’s life a little easier, actually,” Shotwell said, though she emphasized her current focus remained on SpaceX’s ambitious expansion plans.
The merger speculation has been met with positive reactions from some Tesla investors. Wedbush Securities analyst Dan Ives, a longtime Tesla bull, wrote in a recent note that he expected the two companies to combine next year, suggesting the move would enable Musk to own and control more of the AI ecosystem.
Ross Gerber, a longtime Tesla investor and Musk critic, expressed support for a potential merger. “SpaceX is kind of a thing everybody’s talking about. Nobody’s talking about Tesla, and so it kind of sucks for Tesla shareholders,” Gerber told reporters. “Are they better off together or apart? I think they’re better off together,” he said.
The two companies already share substantial connections. They have exchanged employees and board members in the past, and Tesla currently holds a one percent stake in the rocket company through its investment in xAI, which Musk folded into SpaceX earlier this year. SpaceX has also become one of Tesla’s largest customers, purchasing $506 million worth of Megapack batteries and $131 million worth of Cybertrucks last year alone.
The companies are also collaborating on Terafab, a $55 billion chip-building megafactory designed to produce chips for SpaceX’s orbital data centers as well as Tesla’s robotaxis and robots. “There’s no question that there’s synergies between Tesla and SpaceX in our futures,” Shotwell said on IPO day.
Seth Goldstein, an analyst at Morningstar, noted that merging the companies would allow them to share employees and resources without concerns about governance issues and shareholder lawsuits. “Elon would have the resources to send his team wherever he wanted to in order to make the most impact,” said Goldstein.
The merger discussion comes at a challenging time for Tesla, whose ambitious pivot into self-driving cars and robotics has encountered setbacks. The company’s stock is down approximately 10 percent this year, and Tesla has only a few dozen autonomous robotaxis operating in Austin, Dallas, and Houston, falling well short of the aggressive targets Musk set for the end of last year.
However, a merger would face significant obstacles. Despite its massive valuation, SpaceX is not profitable and posted a $4.9 billion dollar loss last year, largely attributed to the substantial cost of its AI buildout. In contrast, Tesla has maintained positive cash flow for years and holds a $45 billion cash reserve.
Goldstein suggested this financial disparity could concern Tesla investors, who might also see their positions diluted if SpaceX requires additional capital in the future. He added that SpaceX’s stock surge, which pushed the company’s market value above Amazon and Meta, could prompt Tesla investors to advocate for delaying any merger until after SpaceX’s lockup periods expire and its valuation stabilizes.
Not all Tesla investors welcome the prospect of merging with SpaceX. Mike Garland, New York City’s assistant comptroller for corporate governance, expressed concerns about the lack of independence on both companies’ boards. “It wouldn’t surprise me if Elon thought of Tesla as a piggy bank to finance SpaceX,” said Garland, adding that his office, which oversees New York City pension funds holding Tesla stakes, would scrutinize any merger terms closely.
Gerber suggested that investor opposition would be unlikely to prevent Musk from consolidating his business empire if he chose to do so. “Anybody who buys Tesla stock obviously knows that Elon controls the company,” said Gerber. “I think investors are more than fine giving up any real ownership rights to have an economic interest in Elon’s future,” he added.
Read more at Business Insider here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.