SpaceX Isn’t Even Public Yet. Investors Are Already Abuzz About a Tesla Merger

With Elon Musk focused on artificial intelligence, investors and analysts discuss a merger of his biggest companies.

Elon Musk surprised onlookers with the quick merger between SpaceX and xAI. Now analysts, investors and close Musk observers are debating the merits of what some see as the ultimate combination: SpaceX and Tesla.

As SpaceX approaches an initial public offering, some investors are discussing the idea of a mega-Musk merger as a follow-up. Musk has said he thinks his companies are converging, but he hasn’t commented on speculation of a merger.

Still, some Tesla supporters argue that combining the companies could accelerate Musk’s artificial intelligence ambitions by bringing his projects under one roof—and potentially create one of the most valuable companies in history.

Alexandra Merz, an influential individual Tesla investor who goes by the screen name Tesla Boomer Mama, posted on Musk-owned X that her best-case scenario is a stock-for-stock merger in June or July that values both companies equally.

If such a transaction were to happen at today’s valuations, it would give a slight premium to investors in Tesla, which has fallen 22.5% since the start of the year, according to FactSet.

While she warned she could be wrong, she described her hypothesis as “connecting public breadcrumbs.”

Others, like James Robertson, a Texas IT executive, are more skeptical. Robertson, who bought shares in Tesla in 2014, said he worries a combined company could go the way of other failed conglomerates like General Electric, risking the success of both businesses. Still, he is eager to invest in the SpaceX IPO, which could be the largest in history, when he gets the chance.

“I think it would be more valuable long term to own stock in both companies,” he said.

Musk hasn’t been shy about aligning his companies to achieve his life’s ambition of building human civilization on Mars. Morgan Stanley’s former Tesla analyst Adam Jonas dubbed the project the “Muskonomy.” In recent weeks, other Wall Street analysts have picked up where Jonas left off, with some telling investors they see some logic to a merger.

“The main investor question we have received is whether Elon eventually plans to combine Tesla with SpaceX, thus forming a broader ‘Elon Inc.’—an idea that TSLA megabulls have frequently hoped for,” Barclays analyst Dan Levy wrote in February.

“While at this point a Tesla/SpaceX combination appears less likely, we see the potential for a combination down the road,” he wrote.

SpaceX confidentially filed for an IPO last week and is aiming to go public by July. The company was last valued at $1.25 trillion in February following its merger with xAI.

Tesla, meanwhile, is already public, with a market valuation of $1.1 trillion.

A deal combining the two companies would rank as the largest merger ever.

Musk stoked the flames with the announcement of new joint ventures between Tesla and SpaceX. Those include a new, shared chip factory called the Terafab in Austin, Texas, and a new AI agent called Digital Optimus that streamlines Tesla and xAI’s software development.

Along with it, he has pushed a new philosophy around artificial intelligence that pegs the success of Tesla’s AI initiatives, which include humanoid robots and autonomous cars, to SpaceX’s plan to build data centers in space. While the technology isn’t proven, in theory, space-based data centers could be powered using solar energy from the sun, mitigating concerns about the vast amounts of energy and real estate needed to power them on Earth.

Musk has long sold his vision for Tesla to become the world’s most-valuable company, hypothesizing an eventual $30 trillion valuation on the strength of its robotics and AI products.

That vision has played well with individual investors, who have buoyed Tesla’s performance on the public markets even though its core automotive business, and main source of revenue, has declined.

While its first-quarter electric-vehicle deliveries were up 6.3% from a year earlier, the company’s total share of the EV market has been on a downward path over the past two years.

In a note Monday, JP Morgan analyst Ryan Brinkman warned that Tesla’s stock price could fall 60% by the end of 2026 as the company struggles to execute on its new strategy.

A $1 trillion pay package approved by Tesla shareholders in November asks Musk to boost the company’s valuation to $8.5 trillion and hit a series of operational milestones with ambitious targets for its new AI products.

At the same time, SpaceX has surged in value on the private markets, in part through its February combination with xAI.

Should Musk eventually propose a deal between Tesla and SpaceX, Columbia Law Professor Dorothy Lund says it would likely face antitrust scrutiny. Working in its favor would be the fact that Tesla and SpaceX aren’t competitors and, assuming President Trump is still in office, Musk’s close relationship with the administration, Lund said.

She also points out that any merger vote would require approval from shareholders of the company targeted for acquisition.

While he was able to merge SpaceX and xAI without a formal process because he was a controlling shareholder in both, a deal with Tesla would be different since he has a smaller stake in that company.

“You couldn’t do this overnight because you need to hold that vote,” Lund said.