Key Takeaways
- Gene Munster of Deepwater Asset Management elevated his merger probability forecast from 80% to 90% following Tesla’s Q2 earnings call
- Elon Musk confirmed increasing collaboration between the companies but stated merger discussions require “appropriate process”
- Kalshi prediction market participants assign a 41% probability to a merger occurring before March 2027
- More than $402,000 in wagers have been placed on Kalshi’s “When will Tesla and SpaceX merge?” market
- Tesla stock declined approximately 4% in after-hours trading following Q2 earnings that missed projections and showed negative free cash flow
During Tesla’s second-quarter earnings conference call on Wednesday, Elon Musk faced a direct question regarding a possible merger between Tesla and SpaceX. While confirming escalating collaboration between his two companies, Musk indicated that an earnings call wasn’t the proper venue for such discussions.
“It’s got to be done with the appropriate process,” Musk explained.
Deepwater Analyst Boosts Merger Probability
Gene Munster from Deepwater Asset Management expressed surprise that the merger inquiry was addressed during the call, interpreting it as an encouraging development.
“Going into the call, I thought there was an 80% chance the two companies come together in the next few years. I’m raising that to 90%,” Munster shared on X.
Munster emphasized that Musk personally drew attention to expanding synergies between the two enterprises, especially concerning Terafab, a semiconductor manufacturing initiative supported by both organizations.
The companies maintain existing commercial relationships. SpaceX utilizes Tesla’s energy storage solutions for its artificial intelligence data infrastructure. Tesla has incorporated SpaceX’s Grok AI technology into its vehicle lineup and has conducted direct vehicle sales to SpaceX.
Space Exploration Technologies Corp., SPCX
Musk has previously discussed his companies moving toward “convergence” in statements posted on X.
Betting Markets Assign 41% Probability
Federally regulated prediction platform Kalshi displays over $402,000 in total betting volume on the market “When will Tesla and SpaceX merge?”
Market participants currently estimate a 41% likelihood of a merger completing before March 1, 2027. The probability increases marginally to 45% for completion before May 1, 2027.
Musk has demonstrated a history of combining his business ventures. He integrated xAI into SpaceX prior to its June initial public offering. In 2016, Tesla purchased Solar City and consolidated it into its energy business unit. That transaction triggered a significant shareholder lawsuit, though Musk ultimately prevailed in court in 2022.
SpaceX completed its public offering in June and temporarily achieved a $2.6 trillion market capitalization. The company has subsequently experienced a market value decline of up to $1 trillion, with concerns surrounding valuation metrics and anticipated insider selling activity.
Tesla shares retreated nearly 4% during after-hours trading Wednesday. The electric vehicle manufacturer reported second-quarter earnings below analyst expectations and disclosed negative free cash flow.
SpaceX stock similarly declined more than 6% during the trading session.
Neither company has issued an official merger announcement or proposal.
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