Quick overview

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Tesla shareholders have had a difficult year, losing 15% while Elon Musk’s SpaceX completes the largest IPO ever and instantly rises to the top of the newly minted trillionaire’s holdings—however, Space Exploration Technologies Corp. Investors in Tesla, who are speculating that Musk will eventually engineer a merger of his two companies, are also finding hope in last week’s IPO.

 

Additionally, some analysts believe that if SpaceX’s stock continues its recent decline, Tesla shareholders will only become more receptive to the concept. A huge technology conglomerate would result from the merger, and it might eventually merge with Nvidia Corp., Alphabet Inc., and Apple Inc. as one of the largest corporations in the world.

Dan Ives, a Wedbush analyst, believes that the likelihood of SpaceX and Tesla merging next year is over 80%. However, Timothy Horan, an Oppenheimer SpaceX analyst, believes that Musk is not in a rush and anticipates eventually seeing a combination.

According to the betting site Polymarket, there is a 39% chance that a deal will be completed by the end of December. According to Nicholas Colas, co-founder of DataTrek Research, a possible merger is unlikely to occur before June of next year because it was not mentioned in SpaceX’s S-1 IPO registration filing. Furthermore, given that SpaceX went public to raise money and Tesla doesn’t produce much on its own, it doesn’t make sense to act immediately, he continued. “I don’t see it as a near-term event, but it doesn’t mean you can’t carry an acquisition premium in Tesla for as long as that possibility is out there,” Colas stated.