SpaceX Stock Price Forecast: 90% Probability of Merger With Tesla, Can the Stock Price Recover?

TradingKey - On July 23, Eastern Time, SpaceX ( SPCX )'s stock price hit another historic low, dropping to a low of $110.85, before rebounding. As of press time, it was up about 1%, trading at $116.4.

Gene Munster, founder of Deepwater Asset Management, said on Wednesday that the likelihood of a merger between SpaceX and Tesla ( TSLA) now seems more likely. He posted on the social media platform X, noting, "Before the conference call, I thought there was an 80% chance these two companies would merge in the next few years. Now I've raised that probability to 90%."

Musk also stated today that he has not ruled out the possibility of a merger with SpaceX, noting the increasing business overlap between the two companies. Musk said during Tesla's earnings call, "As you can see from our collaboration with SpaceX in a number of areas, the overlap is growing."

The market is currently divided into two main camps regarding the merger of the two companies. Proponents believe the merger could streamline Musk's business empire and create a more integrated company spanning artificial intelligence, robotics, manufacturing, energy, and space infrastructure.

The president and chief operating officer of SpaceX recently stated that merging the two companies "might make life a bit easier for Musk" because it could simplify the management of his various businesses. However, JPMorgan also warned of "practical bottlenecks" for the two companies in obtaining regulatory approvals.

SpaceX 2-hour stock chart, Source: TradingView

Looking at the SpaceX stock chart, after experiencing a retracement of over 40%, SpaceX has flushed out some profit-takers, easing selling pressure. The latest 2-hour K-line closed with a long lower shadow and a small positive body, forming a bottoming-and-rebounding pattern.

However, this is only the first step to halt the decline, not a confirmation of a reversal. Currently, the five moving averages remain in a bearish alignment pointing downward, with the price running below all moving averages, meaning the structure of the downtrend has not been broken. If the price fails to establish a solid foothold above $116 in the future, the rebound may still just be a continuation of the decline.

From the Fibonacci retracement chart, if the stock price breaks through the first resistance level of the 5-day moving average, it is expected to test $125, representing an 8.70% upside from the current price, which could open up room for a rebound to the $134-$142 range. If it only tests the $120-$125 range and turns back downward, the downtrend will remain difficult to reverse.

The current new low of $110.85 is an important short-term observation point. If the price breaks down and falls further, the decline will extend to the $100 psychological level.