Here’s how the new numbers make a transaction a lot more attractive for Musk and his fellow SpaceX shareholders, at least in theory. At the offer price of $135 a share, SpaceX would have boasted a valuation of around $1.75 trillion—you saw that number quoted everywhere, pre-June 12. Hence, if SpaceX bought Tesla in an all-stock transaction, and both players maintained the same valuations after they unveiled the merger plan, SpaceX would need to issue 46% more shares (that’s Tesla’s $1.5 trillion divided by the total equity value of $3.25 trillion).
Today, the Kalshi denizens have raised that number just two points, to 54%. Still, SpaceX has achieved a phenomenal market cap that looks highly excessive versus its extremely modest fundamentals. That hands Musk a big opportunity for marshaling a hugely overvalued stock to salvage great value for himself and the other Tesla owners.
The SpaceX S-1 filing makes a big deal over the sundry areas of collaboration between the two companies. Those include partnering to develop digital workflows and their joint-ownership in the Terafab facility that plans to produce a gigantic one terawatt a year in compute hardware. Tesla also owns around $4 billion in SpaceX stock via its previous stake in xAI, purchased by the rocket-maker in February.
Put simply, Musk would be using one incredibly pricey stock to buy another of the same genre. It would be a great deal for Tesla and terrible for SpaceX shareholders. Though SpaceX would suffer less dilution due to the big run-up, its shareholders would still go from owning 100% of the company to less than two-thirds. What would they get in return? Tiny earnings from Tesla’s bedrock EV business, and the addition of a multi-product portfolio also encompassing robotaxis, robots and batteries to the sprawling rocket, Starlink, and AI assortment it’s already running. Musk would be making SpaceX even more of a conglomerate, and even harder to manage. We’d soon see if Musk harbors the special, Warren Buffett-like genius to make such a disparate collection work when company after company, from GE to Honeywell, is dumping the conglomerate model.
Of course, a deal that looks this crazy may not happen. But by sending shares of SpaceX orbital, its fans and Wall Street boosters just made what looks like something that could only happen in Musk’s mind all the more likely.
