On May 27, CNBC reported that, according to a Tesla employee and others familiar with the talks, the EV-maker and rocket and AI purveyor are weighing a merger. Prior to that story, speculation about the potential tie-up was already running rampant. Wedbush Securities analyst Dan Ives put the chances for a combo at 80%, adding that the game plan was already in place for fusing operations at Elon Musk’s two biggest holdings. Long-time Tesla investor Ross Gerber, citing that Musk had already folded xAI into SpaceX, stated that this new gambit would advance his vision of running one big company amounting to a kind of Berkshire Hathaway of AI-driven tech. As of today, betting site Kalshi displays 52% odds that a mega-deal will happen by May of next year.
Though it’s impossible to predict if so many Wall Streeters are making the right call, one thing’s for certain: Capitalizing on the incredible buzz surrounding the pending SpaceX IPO as a strategy for rescuing stricken Tesla makes perfect sense for Elon Musk. At an expected market cap of $1.75 trillion, SpaceX stock looks vastly overpriced (and, as I’ve written, an IPO prominent analysts are saying they’d avoid). So Musk could marshal its inflated shares as currency to pay big for Tesla, even making the deal at its current market cap, a number that’s also over the top based on any conventional metric. Without SpaceX as an acquirer in the wings, Tesla looks highly vulnerable to a major selloff, given that it’s somehow maintaining a gigantic, even expanding valuation as its profits dwindle. “It’s been my intuition for a long time that this has to happen,” says David Trainer, CEO of research group New Constructs. “It’s the only way to bail out Tesla shareholders. It’s what Tesla investors have been expecting for a long time,” and in his view, the anticipated grand exit that’s been bolstering its stock.
