Musk's Two Trillion-Dollar Babies May Finally Hold Hands 🤝

Barclays analyst Dan Levy expects Tesla and SpaceX to announce a deal within weeks, with a transaction possible before Tesla's annual shareholder meeting, which must be held by December 6. In a note, Levy wrote that the merger would likely be pitched as an AI vertical integration play, "Combining the physical AI aspects of Tesla (i.e., Robotaxi, Optimus) with the virtual AI aspects of SpaceX (i.e., Grok, Macrohard)." Investors at the December meeting will have the chance to vote on the proposed combination, Levy added.

The renewed speculation follows SpaceX's record-breaking IPO on June 12, when shares priced at $135, valuing the company at $1.77 trillion. SpaceX shares later peaked at $225.64 before pulling back, and the stock closed October 14 at a $2.07 trillion market value. By contrast, Tesla (TSLA) shares are down about 18% year-to-date. SpaceX also absorbed Musk's AI company xAI in February. Barclays said the likelier structure is SpaceX acquiring Tesla with stock, leaving Musk with roughly 37% of equity and 56% of voting power.

Wedbush analyst Dan Ives has put the odds of a Tesla-SpaceX merger at better than 80% by 2027. Musk, however, told Tesla's July earnings call that any combination would require a proper process. Neither Tesla nor SpaceX (SPCX) has confirmed merger talks. The two companies share operational links through the Terafab semiconductor manufacturing plant under development in Texas, a project potentially requiring hundreds of billions of dollars.

On October 16, Musk posted "Tesla x SpaceX" alongside a Roadster livestream link. The Roadster demo, originally unveiled in 2017, reportedly relies on SpaceX thrusters and has been the subject of a Polymarket market giving the car a 60% chance of flying for one second or more. Polymarket flagged a backward-curving ramp erected at the venue, with reports indicating a remotely operated Roadster will hover on SpaceX thrusters firing compressed gas. Past Tesla reveals have moved shares, with declines following the Cybertruck, the 2024 Cybercab robotaxi, and a September Cybercab event.

Levy argued the Terafab project would benefit from a unified corporate structure, because approvals from a single board would be easier to secure than dual-board sign-offs. Barclays cites Tesla's robotaxis and Optimus humanoid robots alongside SpaceX's AI work as rationale for combining the two firms. The bank said gains would come from integration rather than financial engineering.