Screenshot via Tesla / YouTube
Rockets. Cars. Rockets on cars. Such a fun and simple concept, why didn’t we come up with that?
The lights are dimmed, the stage is set. The audience waits in anticipation. There’s even a dramatic countdown.
By now you’ve likely already seen the car that launches itself and barrel rolls effortlessly through the air. It’s the ultimate billionaire (trillionaire?) flex toy. If stealth wealth was on one end of the spectrum, this would definitely be on the opposite end. It’s the toy Elon Musk promised years ago to mass skepticism. On the day of the reveal he hyped it with guarantees of excitement and even cautions of danger, before finally unveiling the prototype to a starstruck audience. All he was missing was a black top hat and a deck of cards, but this is 2026.
Left on the back burner and seemingly forgotten, suddenly, the Tesla (NASDAQ: TSLA) Roadster premiered just months after SpaceX (NASDAQ: SPCX) went public, and now I can’t help but wonder if this was all part of the setup.
Was this the preview of a merger between Tesla and SpaceX? After the deafening buzz around it, Musk has now publicly confirmed his interest.
The Spectacle That Almost Never Was
Interestingly, while Musk discussed virtually the exact Roadster concept nearly a decade ago, there was a time back in 2008 when both Tesla and SpaceX almost failed, and the Roadster might’ve just been another promising tech idea that vanished into thin air. Even as recently as 2017, Musk tried to sell Tesla to Apple, except CEO Tim Cook never answered his call. The manifestation of the rocket-strapped flying car almost didn’t make it to the main stage.
But is it coincidence for the Tesla Roadster event to be scheduled just a few months after SpaceX went public? Wait a minute. Wasn’t SpaceX supposed to remain private until Starship was making regular trips to Mars?
And wasn’t Elon trying to take Tesla private years ago before scrapping the idea? Maybe a merger could accomplish his goals with fewer problems than trying to go private.
Musk has missed plenty of deadlines. But the Roadster wasn’t one of those. It was perfectly timed, waiting in the curtains, ready to dazzle the crowd less than a week before the announcement of exploratory merger discussions on SpaceX's earnings call.
What would a merger look like?
Let’s say a merger gets done. Who buys who?
It would probably be an all stock SpaceX acquisition of Tesla.
There’s not enough cash to buy a trillion dollar sized company, so it would have to be an issuance of shares. Using a massive amount of shares to acquire a trillion dollar business will massively dilute its existing shareholders.
It’s like drinking your Coke (NYSE: KO), dumping a bunch of ice cubes into your cup, and letting them all melt into your drink. Your soda is watered down and wouldn’t taste the same as it did before the ice cubes went in.
Can Tesla acquire SpaceX? Unlikely. Tesla is the smaller company, and Musk has about 20% in voting rights. If Tesla were to get “watered down,” its shareholders would likely revolt, and Musk would not have enough voting power to push it through resistance.
But can SpaceX acquire Tesla? Existing SpaceX shareholders would also face massive dilution. But Musk controls over 80% of SpaceX’s voting rights despite owning less than 50% of the company, due to his ownership of a second class of stock that holds “super voting rights.” No other shareholders would have enough power to veto a merger decision.
Why not just leave Tesla alone?
Tesla is already its own successful business with a valuation approaching $1.5 trillion in market cap. Couldn’t it just continue as is? Why go through the trouble of a merger?
Starlink and xAI, the “other businesses” under the SpaceX umbrella, might be why.
To continue building on autonomous driving, Tesla’s AI will need to rely on Starlink’s satellite capability. 5G cell networks are amazing, but have too many dead zones that only satellites can cover.
Same with operating the expanding Robotaxi platform. It would require a merger of the hardware with the satellite network infrastructure.
Tesla also owns “physical” AI data, including millions of hours of real world driving video. It also owns the robotic software that makes the cars and the Optimus robots function. It essentially owns the spatial and reactive “brain” of AI.
Yet Musk is reluctant to further expand AI at Tesla, due to his lack of desired voting rights and the concern that “dubious interests” could vote away his control of AI developments.
So Musk pulled his top AI engineers out of Tesla and sent them to xAI. He also diverted thousands of Nvidia (NASDAQ: NVDA) chips away from Tesla to build out xAI’s infrastructure, as well as the logics and communications “brain” of AI in the form of Grok (Musk’s version of ChatGPT).
We now have two halves of the Tesla hardware and the Starlink network, and two halves of the AI brain. It’s almost as if SpaceX and Tesla were meant to co-star on the same stage, with the Roadster as the climax. Can Musk pull off his fairy tale ending?
What Do the Shareholders Think?
Musk will still need shareholders, particularly the institutional ones, to be on board. Lawsuits from dissenting shareholders could block, delay or otherwise damage this potential merger. And that’s why it was so important for the Roadster to serve as the showstopper, and then strike while the iron is hot.
SpaceX Shareholders Who Might Say Yes
Why would SpaceX shareholders want a merger in the face of a potentially enormous dilution to their own shares?
First, they’ve essentially been through multiple acquisitions already. xAI acquired Twitter and bailed out its financial disaster. SpaceX then acquired xAI and built out an enormous but somewhat incomplete AI infrastructure. Combining Tesla’s AI with xAI could create potentially the largest AI ecosystem that virtually no one else can match outside of possibly Alphabet (NASDAQ: GOOGL) and Waymo.
With the vast majority of SpaceX shareholders currently wildly profitable, they might be comfortable with some short term volatility to see through Musk’s long term vision.
SpaceX Shareholders Who Might Say No
Guess who is the largest institutional shareholder of SpaceX stock? Their biggest competitor, Alphabet, with a roughly 5% stake. While publicly Alphabet’s CEO Sundar Pichai has been very cordial, privately Alphabet probably wouldn’t want to help SpaceX acquire Tesla to the disadvantage of Waymo.
Not that it will matter much. In 2024, while Tesla was incorporated in Delaware, Delaware courts struck down Musk’s $56 billion Tesla pay package in favor of a shareholder lawsuit. Within the same year, Musk relocated both Tesla and SpaceX to Texas, where laws are friendlier to Musk’s wants. Tesla shareholders overwhelmingly approved the move from Delaware to Texas while simultaneously reinstating his compensation. SpaceX was still private and didn’t even need a vote to move.
So SpaceX dissenters will have no say in a potential merger.
Tesla Shareholders Who Might Say Yes
There’s multiple reasons so let’s keep it brief. First, money. The company being acquired will likely require a large premium to its current share price to agree to being bought out. Second, many Tesla shareholders have wanted a piece of SpaceX for years while it was still privately held, so now they’ll get a piece of SpaceX, Starlink, and xAI. Third, there is the combined synergy of owning a business that unites complementary AI with leading technology in both terrestrial and aerospace engineering all in one.
And finally, just like the overwhelming reason why Tesla shareholders likely reapproved his pay package as well as the official move to Texas: fear. Fear that if you don’t give Musk what he wants, he’ll just build his ideas somewhere else.
Tesla Shareholders Who Might Say No
There are a lot of institutional investors in Tesla, and they often think differently than a retail investor. A merger of two massive, trillion dollar sized companies would consolidate a tremendous amount of power in one individual, with only one board of directors providing oversight rather than two. Those lines are already being blurred anyway, with multiple directors sitting on both boards.
There could also be concern that SpaceX’s businesses drain cash out of Tesla to fund the buildout of rocket ships, satellites, and AI infrastructure. All of these are capital intensive businesses right now, losing money overall with no light projected at the end of a profitable tunnel until 2029.
They’ll probably need an overpay to get on board. But will there actually be an overpay? It’s likely an all stock transaction. Overpaying Tesla with SpaceX shares just dilutes yourself back anyway when Tesla shareholders end up with SpaceX shares. I’m curious to see how this plays out.
Interestingly enough, there are other major shareholders who sit on both sides. That would primarily be large fund companies like Vanguard and Blackrock. Even though Musk has final say at SpaceX, he still needs majority approval for Tesla. That means convincing Vanguard and Blackrock both sets of shareholders’ best interests will be protected. Truly, this will be fascinating.
Houdini, Copperfield, Musk
Finally, let’s put the largest shareholder of both companies in the spotlight, Elon Musk himself. He's already said that he wants the merger.
Why? Yes, there's obvious synergies. But it’s all about maximum control. By wrapping everything into the SpaceX umbrella, Musk will finally have majority voting power over Tesla, something he doesn’t have right now.
The extra billions added to his ledger wouldn’t hurt either.
Look over here, the Roadster is the magician’s perfect distraction. It’s not likely to impact Tesla sales in any material way. The sleight of hand is in the special change-in-control provision built into Musk’s most recently approved 423.7 million share performance based 2025 Tesla pay package. Currently, he needs to hit incredibly ambitious metrics alongside market cap growth targets over the next 10 years, none of which he is close to. However, in the event of an acquisition, performance milestones are instantly considered as met, and the only thing that matters will be the acquisition price.
If an agreed upon merger were to occur with Tesla at a hypothetical but very possible $2 trillion valuation, Musk will be able to unlock the first of 12 tranches totaling the 423.7 million shares in his pay package, resulting in over 35 million additional Tesla shares valued at roughly $18 billion. Incredibly, only for Musk can $18 billion simply be a rounding error. And unless Musk can really pull the rabbit out of the hat, it’s likely the remaining 11 tranches will be forfeited as unearned shares upon the merger.
Still, pulling off a greatly desired merger, locking in total control, and getting paid an additional 35 million pre-converted Tesla shares to do it…that is one heck of a final reveal.
Will Washington Shut Down the Show or Give Two Thumbs Up?
After the 2024 election, Musk indicated he would scale back on his political spending. But for these upcoming midterm elections, Musk has given $366 million to support Republican candidates, already more than he donated during the presidential election. Over half of that money has gone into the state of Texas, where both SpaceX and Tesla are now headquartered.
Meanwhile, SpaceX has deep ties to the federal government as a long term contractor to NASA and the Pentagon.
With Tesla and SpaceX occupying completely separate industries, antitrust watchdogs might not have the legal grounds to block a deal outright. Instead, the real scrutiny could come from national security officials due to Tesla’s manufacturing ties in China. It’s likely that there would be a conditional approval of some sort to complete the merger.
What Might Happen to the Price of Each Stock?
In a typical case where one company acquires another, the acquirer’s stock price drops while the company being acquired sees a boost in theirs.
However, this will be interesting. SpaceX should offer a premium to Tesla shareholders, then Tesla shares eventually get turned into SpaceX shares. But Musk owns massive blocks of both companies, so he would just be swapping shares from his left hand to his right. So will fund giants like Vanguard, Blackrock, Fidelity, etc. So will shareholders who happen to already own both stocks.
Over the long term, the operational synergies of a unified stock could create tremendous value for shareholders. But the concentrated power in the hands of one man would also be absolutely unprecedented. If he pulls off his biggest corporate balancing act, only time will tell if reality matches his hype.
Skynet Awaits
The Roadster Magic Show was the day we saw the master plan unfold. A merger of Tesla and SpaceX has the potential to combine cars, robots, and rockets with artificial intelligence and machine intelligence, while Starlink provides the global communications system that connects them all.
It takes a gifted magician to blur the lines between (science) fiction and reality. Markets can change quickly, and protecting your wealth through these shifts requires deep analysis and a disciplined approach. Reach out to us today to evaluate your personal situation and discuss the opportunities and risks facing your portfolio.