Elon Musk declined to rule out merging Tesla and SpaceX** on Wednesday's earnings call, and one analyst promptly lifted his odds of a deal to 90%.
A SpaceX takeover of Tesla would be paid for in shares that have lost roughly 50% since their June peak, and that arithmetic moves the terms daily.
Key Points:
- Analysts expect an all-stock deal with SpaceX as buyer, and RBC has modeled a takeover premium of 20% to 30% for Tesla holders.
- Every move in SpaceX stock changes how many new shares the buyer must issue, so a falling price makes the purchase costlier for its own investors.
- The combined company would open in the red, since SpaceX losses over the past year outweigh what Tesla earns.
SpaceX Tesla Deal Structure Points To All Stock
Wall Street has already settled on a rough shape for any transaction between the two. RBC analyst Tom Narayan estimated Tesla could win a premium of 20% to 30% in an all-stock purchase, payment for surrendering voting control, and raised his Tesla target to $500. JPMorgan analyst Doug Anmuth called all-stock the likeliest route, listing a new holding company or a phased merger as alternatives.
The bank has separately flagged Chinese approval as the hardest practical obstacle, given Tesla's factories there.
The share price, not the strategy, does the rest of the work. At $135, SpaceX would have needed to issue 46% more stock to buy Tesla, a figure that narrowed to 38% once the price reached $185.
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Merged Company Would Start Its Life In The Red
That ratio has widened again, because SpaceX now trades below its offering price. Its existing holders would still see their stake fall from the whole company to under two-thirds, while Elon Musk's voting power in the merged group could pass 50%.
Musk controls roughly 85% of SpaceX votes today against about 20% at Tesla, a gap that decides who sets the terms.
The earnings picture presents the harder problem for whoever owns the result. SpaceX losses over the past four quarters more than offset Tesla's profits, which would leave the combined company in the red on a market value measured in trillions.
Nobody agrees on what the buyer itself is worth. Raymond James carries an $800 target on the SpaceX shares. Morningstar pegged fair value near $62, and Morgan Stanley does not expect positive free cash flow before 2035. Lock-up expirations later this year will push more stock into a market that has no settled price.
Tesla Earnings Already Swing With SpaceX Shares
The link between the two companies is not hypothetical. Tesla booked a $1 billion paper gain on its SpaceX stake in the second quarter, offset in part by a loss of about $100 million on Bitcoin (BTC).
That gain was marked to the Jun. 30 price and now points to a reversal, which a merger would end by absorbing the holding.
SpaceX has now given back everything it gained in its first weeks as a public company.
The stock priced at $135 on Jun. 12, opened at $150 and climbed past $225 within days before sinking to a record low of $110.85 on Thursday.
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