Shares of Tesla Motors (NASDAQ: TSLA) and SpaceX edged higher in pre-market trading on Tuesday, following CEO Elon Musk's refusal to rule out a potential merger between the two companies, reigniting speculation that has spread from retail investors to Wall Street.
During the All-In Summit, Musk was asked why Tesla and SpaceX remain separate entities despite their increasingly intertwined operations. Calling it a "good question," he hinted that their deepening relationship could ultimately spur action. "With all this collaboration taking place across so many levels, when there is such close cooperation across so many areas, who can imagine what actions might be taken," he stated.
Both companies experienced a roughly 2% decline on Monday, but in Tuesday's pre-market session, Tesla Motors and SpaceX saw modest gains of 0.1% and 0.5%, respectively.
Wall Street Weighs In on a Tesla-SpaceX Merger
The debate over a potential combination was initially fueled by well-known retail investors who constructed possible equity structures, share exchange ratios, and valuation models. The discussion has since captured the attention of analysts at Jefferies and JPMorgan.
Jefferies noted that a merger between the two companies carries strategic logic. Their framework estimates that without paying a merger premium, Musk could retain approximately 55.3% of voting control, potentially leaving room for a premium to be offered to Tesla Motors shareholders.
JPMorgan, meanwhile, described a merger as "strategically coherent on paper," pointing to potential integration opportunities across artificial intelligence, robotics, energy, transportation, and space.
Deepening Ties Between Tesla and SpaceX
Although Tesla Motors and SpaceX remain legally independent, their business operations are becoming increasingly interwoven. Tesla contributes expertise in batteries, power systems, manufacturing, and AI. SpaceX brings launch capabilities, Starlink connectivity, satellite infrastructure, and experience managing large-scale, complex engineering projects.
SpaceX President Gwynne Shotwell revealed at the All-In Summit that SpaceX personnel have also moved into xAI to fill leadership and engineering gaps. She noted that team integration has been "faster than I expected," although the businesses are "not fully integrated yet."
Shotwell also highlighted collaboration in AI, computing, and solar panel production. SpaceX plans to launch AI computing satellites, while Musk's companies are advancing work in chips, energy, data centers, and manufacturing.
The autonomous vehicles and Optimus robots from Tesla Motors require AI computing, energy storage, and reliable connectivity. Conversely, SpaceX needs batteries, solar power, chips, and large-scale manufacturing for Starlink, Starship, and its upcoming orbital computing network.
Roadster Teaser Adds Fuel to Speculation
Adding to the merger speculation, Tesla recently announced a next-generation Roadster launch date of October 1st, accompanied by the phrase "Go for launch" — an unmistakable nod to SpaceX rocket missions. The Roadster was first unveiled in November 2017 but has faced years of delays.
The electric vehicle maker frequently uses high-profile product events to draw attention, and Musk has previously discussed ambitious performance targets for the Roadster, including possible rocket-assisted features.
On Stocktwits, sentiment for Tesla Motors is rated as "extremely bearish," while SpaceX is "bearish," with message volumes for both considered "normal." Over the past year, Tesla Motors has declined 9%, and SpaceX has fallen 8%.