A Tesla-SpaceX Merger Could Be Weeks Away

Coming into Thursday’s trading, Tesla stock was down 18% this year. (Ludovic MARIN / AFP via Getty Images)

Key Points

• Barclays analyst Dan Levy says an all-stock merger between SpaceX and Tesla could be announced before Tesla’s annual general meeting.
• The potential deal would be pitched as an AI vertical integration play, combining the physical AI of Tesla with the virtual AI of SpaceX.
• A merger would require shareholder approval and the approval of U.S. antitrust regulators.

Investors have been speculating on—even hoping for—a SpaceX / Tesla merger for months. An announcement could be weeks away.

Barclays analyst Dan Levy has been chatting with clients about the potential deal, which would be the largest merger in history, and has developed a few thoughts.

He sees an all-stock deal with SpaceX as the acquiring company. An announcement is “possible” before Tesla’s annual general meeting, which should happen no later than Dec. 6. That’s weeks away.

Reasons for the merger aren’t hard to identify. For starters, there is Elon Musk. He runs and controls both companies. (And with SpaceX’s dual-class share structure maintained, Musk would have more than 50% voting control in a combined company.)

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Next, there is AI. Both companies are investing heavily in AI. SpaceX is working on frontier models and building AI data centers. Tesla wants to populate the Earth with “physical AI,” including robo-taxis and robots.

“The merger would likely be pitched as an AI vertical integration play,” wrote Levy. “Combining the physical AI aspects of Tesla (i.e., Robotaxi, Optimus) with the virtual AI aspects of SpaceX (i.e., Grok, Macrohard).”

Terafab, SpaceX and Tesla’s semiconductor fab being built in Texas is another reason for the combination, Levy says. During Tesla’s first-quarter earnings conference call, Musk noted that both companies’ boards need to approve decisions, adding complexity. “By combining the two companies, this barrier would be removed.”

To be sure, a merger might not happen on that timeline—or at all. The deal will need shareholder approval and the approval of U.S. antitrust regulators. Significant hurdles remain, but it looks more and more likely the companies will try to combine.

Tesla stock was down 1.5% in premarket trading Thursday at $361.50. SpaceX stock was down 2.6% at $148.20, while S&P 500 futures were down 0.3% and Dow Jones Industrial Average futures were up 0.3%.

Merger speculation isn’t driving shares down. Instead, CoreWeave bond yields are rising, raising concerns about financing the AI data center building boom. CoreWeave stock was down 5.8% in premarket trading at $62. Shares fell more than 15% on Wednesday.

Write to Al Root at allen.root@barrons.com.

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