The Ultimate High-Stakes Gamble! Investors Bet on Tesla Merging with SpaceX

SpaceX has completed the largest IPO in history, and market attention is now turning to Musk's "final plan." Investors are betting that these two trillion-dollar giants will eventually merge, and this expectation is becoming a key factor supporting Tesla's stock price.

Against the backdrop of Tesla's stock price declining nearly 10% this year, investors are shifting their focus to another core asset under Musk—SpaceX. The latter completed the largest-ever initial public offering (IPO) last week and quickly became the highest-valued company in its business portfolio.

Although SpaceX's stock price retreated after going public, this event has instead brought new expectations for some Tesla shareholders: the market is beginning to bet that Musk may ultimately push for a merger between the two companies. Some analysts believe that if SpaceX's stock price continues to fall from high levels, this integration idea will be more likely to gain support from Tesla investors.

Driven by this expectation, Tesla's stock performed relatively steadily after the IPO and recently rebounded above $400, while SpaceX experienced fluctuations after initial enthusiasm waned.

Ivan Feinseth, Chief Investment Officer at Tigress Financial Partners, called this IPO a "narrative catalyst" for Tesla. Dave Mazza, CEO of Roundhill Financial, also said that compared to before SpaceX's listing, he now believes a merger between the two companies is more plausible.

Mazza pointed out: "For years, Tesla was the only publicly traded company that could command a 'Musk premium,' but that's no longer the case. SpaceX more directly embodies the AI and space story. The current support for Tesla's stock above $400 comes from a gradually forming acquisition premium."

From a business structure perspective, the two companies do not fully overlap: Tesla focuses on electric vehicles, autonomous driving, and humanoid robots like Optimus; SpaceX engages in rocket launches and satellite operations, and plans to achieve crewed landings on Mars.

However, in the field of artificial intelligence, they intersect and also face huge funding needs. SpaceX integrated xAI (which includes the Grok chatbot and the original Twitter platform) in February this year and is working with Tesla on a semiconductor manufacturing joint venture called "Terafab." The market believes that future investments could exceed what a single company can bear.

The main obstacle to a potential merger is valuation differences and volatility. Data shows that as of the close on Monday, SpaceX's valuation was about $2 trillion, a significant drop from $2.6 trillion a week earlier; Tesla's market cap is approximately $1.5 trillion.

Seth Goldstein, analyst at Morningstar, pointed out that with SpaceX's valuation rising rapidly before its listing, Tesla shareholders might be reluctant to acquire when its valuation is significantly higher. He wrote: "We suspect that when SpaceX's valuation multiple is far above Tesla's, Tesla shareholders would support an acquisition."

He also noted that if SpaceX's stock price falls closer to its fair value of around $63, shareholder acceptance might increase. The IPO was priced at $135, and it is currently around $155.

Nevertheless, Goldstein still believes, "It wouldn't be surprising to see a deal within a year," citing Musk's companies' decision-making pace as typically fast.

Wedbush analyst Dan Ives estimates that the probability of a merger next year exceeds 80%; meanwhile, Oppenheimer analyst Timothy Horan believes a merger is possible in the end, but Musk may not be in a rush. According to prediction platform Polymarket, the probability of completing a deal by the end of December is 39%.

Nicholas Colas, co-founder of DataTrek Research, pointed out that since SpaceX's IPO documents did not mention related plans, the likelihood of pushing for a deal in the short term is low, and it is unlikely to happen before June next year. Additionally, he believes that SpaceX's IPO was primarily for fundraising, and Tesla's cash flow capacity is limited, making this an unfavorable time for integration.

He said: "That doesn't mean the market can't price in an acquisition premium for Tesla, but I don't see this as a short-term event."

After going public, SpaceX attracted a large amount of retail funds. Vanda Research and AJ Bell data show that some investors have shifted from Tesla to SpaceX.

Glenn Reisender, a 71-year-old Long Island investor, said he subscribed for 100 shares of SpaceX and was allocated 55 shares, and if a merger is announced in the future, he will continue to buy. He stated: "I think a merger would be beneficial for both sides, allowing for integration and strengthening."

Another active Tesla investor, X platform account @TeslaBoomerMama运营者亚历山德拉· Merz (Alexandra Merz), said she did not buy SpaceX stock because she expects the deal to be completed next year.

Stephen Levy, a 27-year-old full-time investor in Chicago, only subscribed for 5 shares of SpaceX before the IPO. He said that once the two companies merge, "my overall investment judgment will change," and called it "the ultimate form of investment you really want."

However, there are also risks of a reverse scenario. If the merger ultimately fails to materialize, Tesla's stock price could face pressure.

Mazza stated: "Without a deal, there is no shortcut. SpaceX has now become an independent 'Musk premium' vehicle, and Tesla can no longer rely on this sentiment to support its valuation. It must realize its value through businesses like Robotaxi and Optimus."