SpaceX (SPXC) share price fell 2.59% yesterday on rumours of a merger with Tesla (TSLA). The stock fall was less about the rumoured merger and more about the broader decline in artificial intelligence (AI) stocks.
According to Barclays analysts, headed by Dan Levy, the merger of both companies run by Elon Musk could happen before the annual general meeting of Tesla, scheduled no later than December 6. This timeline would allow the deal to be voted on during the same general meeting.
Dan Levy's team believes that the merger will be seen as a vertical integration deal for both companies to leverage artificial intelligence, combining the physical AI of Tesla, such as Robotaxi and Optimus, with the virtual AI of SpaceX, including Grok and Macrohard.
Although there will be some financial synergies, the core of the deal lies in combining both companies' artificial intelligence technology to create a dominant market force. Then there is the issue of corporate control.
Assuming SpaceX merges with Tesla, which is highly likely considering its dual-class structure, Elon Musk will own roughly 37% of the new entity but will retain 56% of the voting rights. This structure ensures that Musk maintains absolute control over the strategic direction of the combined conglomerate, regardless of external shareholder pressure.
According to Levy, each Tesla share will get approximately 0.7 SpaceX shares, with the premium priced into the ratio. Elon Musk has even been feeding this fire.
During the Q2 earnings call of Tesla, when asked whether a merger is possible, he responded, "There's more and more overlap, especially with Terafab; that's really going to be a gigantic product." Musk continued at the All-In Summit held last month: "With all this collaboration, on so many levels, who can imagine what action one might take when there's so much close collaboration in so many areas." These cryptic remarks have fueled speculation among investors and market analysts alike.
Tesla stock is down by more than 1% in pre-market trading on Thursday morning as investors digest the potential implications of such a massive corporate restructuring. SpaceX is currently valued at $2.06 trillion, while Tesla starts the day with a $1.45 trillion market capitalisation.
The market is now closely watching the upcoming financial disclosures. Tesla is scheduled to report its Q3 earnings on October 21, which may provide further clarity on the company's operational trajectory and potential future partnerships.
Analysts remain cautious, noting that regulatory hurdles could still pose a significant challenge to any proposed merger between these two tech giants. The integration of space exploration technology with automotive and robotics sectors represents a new frontier in corporate strategy.
If the merger proceeds, it would create one of the most valuable and technologically diverse companies in history, effectively bridging the gap between terrestrial and extraterrestrial AI applications. Investors are advised to monitor the situation closely as the December 6 deadline approaches.
The volatility in the tech sector, combined with the high stakes of this potential deal, suggests that the coming weeks will be critical for both Tesla and SpaceX shareholders.