If Elon Musk merges SpaceX with Tesla he’ll create a $3.4 trillion behemoth—with zero profits
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On May 27, that, according to a Tesla employee and others familiar with the talks, the EV-maker and rocket and AI purveyor SpaceX are weighing a merger.
Key facts
That’s down from $15 billion in 2023, and $7.0 billion in 2024
It registered a loss of $4.94 billion last year, and the trend’s downwards: It made a tiny but still positive $791 million in 2024
At Tesla’s current valuation of $1.65 trillion, SpaceX would be spending 420 times earnings, meaning that shareholders are getting $2.3 in earnings for every $1000 they’re paying
In its S-1, SpaceX calculates the total addressable market for AI at $26.5 trillion, 13-times the potential for connectivity and rockets combined
Summary
Wedbush Securities analyst Dan Ives put the chances for a combo at 80%, adding that the game plan was already in place for fusing operations at Elon Musk’s two biggest holdings. Though it’s impossible to predict if so many Wall Streeters are making the right call, one thing’s for certain: Capitalizing on the incredible buzz surrounding the pending SpaceX IPO as a strategy for rescuing stricken Tesla makes perfect sense for Elon Musk. At an expected market cap of $1.75 trillion, SpaceX stock looks vastly overpriced (and, as the reporter has written, an IPO prominent analysts are saying they’d avoid ). A SpaceX-Tesla union would mark by far the largest merger of all time.
If SpaceX can do the deal around the same price where its stock’s expected to open following the IPO, slated for mid-June, the combined SpaceX-Tesla would emerge sporting a valuation of $3.4 trillion. While the $3.4 trillion valuation is breathtakingly big, the combined profits generated by the two potential partners wouldn’t even qualify as shockingly small––based on recent results, they’d be negative. That’s down from $15 billion in 2023, and $7.0 billion in 2024.