Gary Black Warns Tesla Bulls Against Hyping SpaceX Merger, Says Roadster’s Brand Impact Could Outweigh Earnings
Future Fund Managing Partner Gary Black warned Tesla Inc. (NASDAQ:TSLA) investors against hyping a potential merger with Elon Musk’s Space Exploration Technologies Corp. (NASDAQ:SPCX), arguing that arbitrageurs could erase any shareholder premium, even as he acknowledged the new Roadster’s potential to strengthen Tesla’s brand despite its limited financial impact.
Black Warns Merger Could Erode Shareholder Premium
"$TSLA bulls should stop pumping the TSLA-SPCX deal," Black wrote Thursday on X.
"Since it will be a stock for stock deal and in such combinations the combined entity should trade at the lower stock’s multiple (here TSLA), any premium paid for $TSLA with $SPCX stock will be whittled away by arbs by the time the deal closes," he added.
Black’s argument assumes a stock-for-stock transaction and that investors would value the combined company using Tesla’s lower valuation multiple.
He previously warned that a merger could reduce Tesla’s valuation by 20%–25%, citing shareholder dilution and a potential conglomerate discount.
Black Sees Limited Earnings But Brand Upside
In a subsequent X post Friday, Black estimated that the SpaceX-powered Roadster would contribute just $0.06 per share to Tesla’s 2029 earnings, assuming 3,000 annual deliveries and $100,000 profit per vehicle.
That represents approximately 1.1% of the $5.40 consensus adjusted earnings-per-share estimate for 2029.
However, he argued that the vehicle’s flying capabilities, acceleration and handling could deliver a much larger "halo effect on the Tesla franchise and brand impact."
Black maintained his cautious outlook, citing Tesla’s 230-times 2026 price-to-earnings multiple, downward earnings revisions through 2030 and growing competition in autonomous driving.
Munster And Barclays Highlight Tesla-SpaceX Merger Potential
Barclays analyst Dan Levy recently suggested a merger announcement could arrive before Tesla’s December shareholder meeting, citing opportunities to integrate artificial intelligence (AI) and manufacturing.
Investor Ross Gerber argued that a SpaceX acquisition of Tesla "has become obvious" following the Roadster unveiling, although he dismissed its thruster technology as "just for show."
Deepwater Asset Management’s Gene Munster similarly interpreted the demonstration as evidence of Musk’s merger ambitions. "It was an engineering flex with no commercial value beyond embarrassing traditional car makers," Munster wrote, adding, "Elon can’t wait to bring $TSLA and $SPCX together."
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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