Balancing the benefits implies a 30% Tesla premium using ARK’s 2031 projections, but a 50% discount using its 2036 projections.
- A merger announcement is reportedly targeted for early 2027, with completion sought before Trump leaves office.
- ARK’s model puts Tesla holders five times better off by 2036 after a merger, versus 1.3 times for SpaceX holders, compared with remaining separate.
- Committees have not agreed on terms, and shareholder and regulatory approvals are still hurdles.
Shares of Tesla (TSLA) and SpaceX (SPCX) slipped overnight amid a reported push to merge Elon Musk’s companies before President Donald Trump leaves office, while ARK Investment Management expects a deal to leave Tesla shareholders five times better off by 2036 than if the companies remained separate.
TSLA shares fell 3% in overnight trading late on Wednesday, while SPCX declined more than 1%.
Politics Adds Pressure To TSLA-SPCX Merger Push
A merger announcement is being targeted for the first half of 2027, with the aim of closing the deal during Trump’s presidency, people familiar with the matter told Bloomberg. The companies have a combined market value of about $3.7 trillion, but their independent committees are yet to agree on deal terms.
Musk’s improved relationship with Trump could help advance a deal, but potential congressional scrutiny after the midterms and the risk of falling AI-stock valuations are apparently adding pressure to act.
“Musk and his advisers certainly want to take advantage of this window,” Bill Birmingham, head of research at REX Financial, told Bloomberg. “The timing is both favorable and critical.” SpaceX’s share-price recovery also makes it an attractive time to pursue a transaction, Morningstar analyst Nicolas Owens said. “It’s a great time to use that stock as currency to do a deal,” Owens said. “If SpaceX’s stock price were to fall, it could complicate a purchase agreement.”
ARK Sees Both Shareholder Groups Winning
Brett Winton, an analyst at Cathie Wood’s ARK Investment Management, said on X that a merger could benefit both shareholder groups even at the current share-price ratio. “On our modeling, compared against the no merger case, even if merged at the current share price ratio Tesla shareholders would be ~1.6x better off in 2031 while SpaceX shareholders would be ~2x better off,” he said.
By 2036, ARK’s model puts Tesla shareholders about five times better off after a merger and SpaceX shareholders about 1.3 times better off, compared with the companies remaining separate. “So the fair premium depends heavily on your timeframe,” Winton said. “On longer time horizons SpaceX shareholders should be asking for a discount. On shorter time horizons Tesla shareholders should be asking for a premium.”
He said balancing the projected benefits for both shareholder groups would imply a 30% premium to Tesla’s current share price using the 2031 projections, but a 50% discount using the 2036 projections. “But everyone is better off with a merged entity,” Winton added.
Analyst Sees AI Progress Driving Merger
Winton sees orbital computing as a much larger opportunity than Robotaxi, while agreeing that Optimus will take longer to develop and require vast AI resources. Musk also highlighted the companies’ shared AI and engineering interests when discussing a potential merger on SpaceX’s Tuesday earnings call.
“There is a lot to be gained from cooperating on developing super intelligent software, chip design, the Terafab, obviously, robotics, mass to orbit with the Starmind constellation,” he said.
Musk said SpaceX is targeting 13 gigawatts of compute online by the end of 2027. At Tesla, he expects Optimus deliveries to external customers around late 2027 and sees Robotaxi becoming financially significant in the second half of that year.
Analyst Dan Ives also linked Tesla’s AI progress to the case for a merger. “Optimus production has begun as the AI era now takes shape at Tesla which dovetails into SpaceX merger strategic fit,” he said on X. The companies are already working more closely together. Tesla has pushed engineers to adopt Musk’s AI coding products, while the two businesses have collaborated on robot AI capabilities.
Terafab’s Cost Split Remains Undecided
Tesla and SpaceX are yet to decide how to share the cost of Terafab, which Musk estimates could exceed $100 billion over the long term. “We’ve got to figure out what the relative split is between SpaceX and Tesla in terms of who pays for what at Terafab,” Musk said on Tesla’s Wednesday earnings call.
“But it’s not going to be less than tens of billions in capital equipment up through early 2028. Then it’ll probably be north of $100 billion long term.”
Tesla CFO Vaibhav Taneja said most initial orders for research-fab equipment had already been placed. Musk hopes to produce the first test chip around May or June 2027 and is targeting volume production in 2028.
SpaceX separately forecast capex of $35 billion to $40 billion for the fourth quarter alone. Tesla lowered its full-year 2026 capex forecast to about $20 billion but expects spending to rise in subsequent years. Tesla generated more than $1.5 billion in free cash flow in the third quarter and ended the period with over $45 billion in cash and investments.
Musk Backs Merger, But Terms Still Open
Despite supporting a combination, Musk stressed on SpaceX’s earnings call that a deal remains uncertain.“I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it,” he said.
Independent board committees are considering the proposal, with Musk excluded from their discussions because of his conflicting interests.“I can just say that at this point that the special committees have not reached agreement on the terms of any transaction,” he said. “Obviously, there is no guarantee that they will.”
Shareholder approval is another hurdle, with Musk saying Tesla would need support from 50% of all shares, not just half the votes cast. SpaceX’s sensitive U.S. defense ties and Tesla’s extensive manufacturing operations in China could additionally complicate regulatory approval.
How Do Retail Traders Feel About TSLA And SPCX?
On Stocktwits, retail sentiment for TSLA was ‘extremely bullish’ amid ‘extremely high’ message volume, while SPCX sentiment was ‘bullish’ amid ‘high’ message volume.
While TSLA stock has declined 14% year-to-date, SPCX has fallen 1% over the same period.
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