Musk Considers Merging Tesla and SpaceX
Potential $3.5 Trillion Consolidation Sparks Market Gains Amid Regulatory Concerns
Sarah Connor
Elon Musk is considering a merger between his two major companies, Tesla and SpaceX.
SpaceX shares surged 8% in after-hours trading; Tesla shares climbed 1.5%.
Elon Musk, CEO for both entities, cannot participate in the ongoing shareholder discussions. Special committees from each company formed at the request of investors, and they have not yet agreed on merger terms.
Musk sees "a lot to be gained" by bringing the businesses together. He states combining the firms would benefit their work in chips, artificial intelligence, and other technology projects. He expects SpaceX's annual recurring revenue to surpass $500 billion by the end of 2027.
A lot to be gained.
SpaceX operates as a significant contractor for NASA, the US military, and intelligence agencies. Its Starlink revenue reached $5.25 billion.
Meanwhile, Tesla prioritizes its Model Y and Model 3 production. The company develops humanoid robots, known as Optimus, and last week unveiled its Roadster, which featured compressed-air thrusters.
Both companies engage in costly projects with uncertain commercial outcomes. These include Starship, self-driving vehicles, humanoid robots, and orbital data centers. Tesla maintains substantial manufacturing and commercial operations in China, including its Shanghai factory.
Dan Sheehan indicated that The deal itself may not increase Musk's personal wealth. It would further concentrate his holdings in a single stock. The move could also face increased regulatory pressure if Democrats secure more seats in next month's US midterm elections.