Elon Musk declined to rule out combining Tesla and SpaceX on Tesla’s July 22 earnings call, keeping the idea a live question for both shareholder bases. An unusual pricing problem and a likely national security review still stand between the notion and any actual deal.
On Tesla’s July 22 earnings call, an analyst asked Elon Musk whether he sees synergies from combining Tesla with SpaceX, and Musk did not rule it out. According to The Motley Fool, he said there is “more and more overlap” between the two companies, singling out Terafab, SpaceX’s planned chipmaking venture.
A deal, he added, would have to move through the appropriate process. That non-answer, coming from the CEO of both companies, makes a merger a live question for two of the largest shareholder bases in the market.
The overlap is already real business
The two firms are already intertwined. Grok, the AI assistant built into Tesla vehicles, comes from the xAI business SpaceX absorbed before its initial public offering in June. Tesla’s Cybercab robotaxis are expected to lean on SpaceX’s Starlink network, and Terafab could eventually supply the chips Tesla needs for its cars and robots.
Bankers have taken note as well. JPMorgan told clients this month that a combination would make strategic sense on paper, yet it cautioned that executing a deal is far messier than the logic suggests.
Pricing and Washington stand in the way
The first obstacle is price. SpaceX carries a $1.5 trillion market value on trailing-12-month revenue of about $19 billion, up 33% from the year before, and it remains unprofitable.
Tesla, valued at about $1.2 trillion, trades at more than 300 times earnings after this week’s post-earnings sell-off. Musk complicates the math further, since he controls about 85% of SpaceX’s voting power versus roughly 20% of Tesla’s, effectively sitting on both sides of the table.
Washington is the second obstacle. SpaceX is a major defense and government contractor, while Tesla runs one of its largest factories in Shanghai and depends on China for a meaningful share of sales. Folding a national security asset into a company with deep Chinese exposure invites scrutiny in both countries, and such a review could stretch on for years, with no guarantee of approval.
What it means for shareholders
Which side a deal would reward depends entirely on the exchange ratio, and that remains unknowable. For now, each business stands on its own numbers.
Tesla reported a 1.4% operating margin for the second quarter. Its shares sank about 14% on Thursday. Meanwhile, SpaceX is due to report its first earnings on Aug. 4, leaving the merger an idea rather than a term sheet.
Source: The Motley Fool
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