ONE BIG THINGA SpaceX-Tesla union would be a giant money-loser
A SpaceX-Tesla union would be the largest merger of all time, writes Fortune’s Shawn Tully, but it still wouldn’t make any money.
The two enterprises’ valuations are about equal, Tesla’s at $1.65 trillion and SpaceX’s anticipated IPO at $1.75 trillion. To clinch the deal, SpaceX would need to issue a batch of new shares equivalent to 94% of the current number, and that would nearly double the stock from 4.1 billion shares to 8 billion. The combined SpaceX-Tesla would emerge with a valuation of $3.4 trillion.
While the $3.4 trillion valuation is breathtakingly big, the profits generated by the combo wouldn’t even qualify as small. Based on recent results, they’d be negative. At today’s numbers, a pro-forma SpaceX-Tesla would show a GAAP yearly earnings of around minus $1 billion.
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