Key Takeaways
- Gene Munster of Deepwater Asset Management increased his merger probability forecast from 80% to 90% following Tesla’s Q2 earnings conference call
- Elon Musk confirmed deepening integration 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 bets placed on Kalshi’s “When will Tesla and SpaceX merge?” prediction contract
- Tesla stock declined approximately 4% in after-hours trading following Q2 results that showed lower-than-expected profits and negative free cash flow
During Tesla’s second-quarter earnings conference call on Wednesday, Elon Musk fielded a direct question regarding a possible merger between Tesla and SpaceX. While he confirmed increasing integration between both enterprises, 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 said.
Deepwater Analyst Increases Probability Forecast
Gene Munster from Deepwater Asset Management expressed surprise that the merger inquiry received any consideration during the call. He interpreted this as an encouraging indication.
“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 posted on X.
Munster emphasized that Musk personally drew attention to the expanding synergies between both organizations, especially concerning Terafab, a semiconductor manufacturing initiative supported by both entities.
The companies maintain existing commercial partnerships. SpaceX currently utilizes Tesla’s energy storage technology for its artificial intelligence data infrastructure. Tesla has also 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 made on X.
Betting Markets Show 41% Merger Odds
Kalshi, a federally regulated prediction market platform, displays over $402,000 in total wagers on its “When will Tesla and SpaceX merge?” contract.
Market participants currently assess a 41% likelihood of a merger completing before March 1, 2027. This probability increases marginally to 45% for completion before May 1, 2027.
Musk maintains a history of consolidating his business ventures. He integrated xAI into SpaceX prior to its June initial public offering. In 2016, Tesla purchased Solar City and integrated it into its energy business segment. That transaction triggered significant shareholder litigation, which concluded in Musk’s favor in 2022.
SpaceX completed its public market debut in June, momentarily achieving a $2.6 trillion market capitalization. The company has subsequently experienced a decline of up to $1 trillion in market value, accompanied by concerns regarding valuation metrics and anticipated insider stock sales.
Tesla stock fell nearly 4% during after-hours trading Wednesday. The electric vehicle manufacturer reported second-quarter earnings below analyst projections and disclosed negative free cash flow.
SpaceX shares similarly declined more than 6% during the trading session.
Neither company has issued an official merger announcement or formal proposal.
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