Musk fuels Tesla (TSLA.US) SpaceX (SPCX.US) merger speculations and “suggests” action in “close cooperation”

The Zhitong Finance App learned that Tesla (TSLA.US) and SpaceX (SPCX.US) stock prices rose slightly before the market on Tuesday. Previously, CEO Elon Musk refused to rule out the possibility of a merger between the two companies, reigniting speculation that spread from retail investors to Wall Street.

When asked at the All-in summit why Tesla and SpaceX remain independent despite their increasingly close relationship, Musk called it a “good question” and hinted that the relationship between the two could eventually prompt action. “With all this collaboration on so many levels, who could imagine what action might be taken when there is such close collaboration in so many areas.” he said.

Tesla and SpaceX both fell about 2% on Monday, rising slightly by 0.1% and 0.5%, respectively, in Tuesday's pre-market trading.

Wall Street weighs Tesla-SpaceX merger

The merger debate between Tesla and SpaceX initially involved well-known retail investors constructing possible shareholding structures, share exchange ratios, and valuation models. Since then, it has attracted the attention of Jefferies and J.P. Morgan Chase.

Jefferies said it believes there is a strategic logic to merge the two companies. Its framework estimates that if the deal is completed without paying the merger premium, Musk can retain about 55.3% of voting control, which may leave room for Tesla shareholders to obtain a premium. J.P. Morgan said the merger was “strategically consistent on paper,” pointing out the possibility of integration in the fields of artificial intelligence, robotics, energy, transportation, and space.

Tesla's relationship with SpaceX deepens

Tesla and SpaceX remain legally independent, but their businesses are increasingly intertwined.

Tesla provides expertise in batteries, power systems, manufacturing, and AI. SpaceX contributes launch capabilities, Starlink connectivity, satellite infrastructure, and experience in operating complex engineering projects on a large scale.

SpaceX President Gwen Shortwell said at the All-In summit that SpaceX personnel have also joined XAI to fill gaps in leadership and engineering. She said the team was integrating “faster than I expected” even though the business “hasn't been fully integrated.”

Shortwell also pointed out collaboration in AI, computing, and solar panel production. SpaceX plans to launch AI computing satellites, and Musk's companies are working in the fields of chips, energy, data centers, and manufacturing. Tesla's autonomous vehicles and Optimus robots require AI computing, energy storage, and reliable connectivity. SpaceX needs batteries, solar power, chips, and large-scale manufacturing for Starlink, Starships, and their upcoming orbital computing network.

Roadster teaser fuels merger speculation

Tesla recently announced that it will release the next generation Roadster on October 1, and used the phrase “Go for launch” (ready to launch), clearly paying tribute to SpaceX's rocket mission. The Roadster debuted in November 2017 and has since been delayed for many years.

The electric car maker often uses high-profile product campaigns to attract attention, and Musk has previously discussed the Roadster's ambitious performance goals, including possible rocket assist features.

On Stocktwits, Tesla's sentiment was “extremely bearish” and SpaceX was “bearish,” and the volume of news for both was “normal.” Over the past year, Tesla fell 9% and SpaceX fell 8%.