Alexandra Merz, CEO of L&F Investor Services and a long-term Tesla shareholder, deliberately avoided purchasing shares in SpaceX's recent initial public offering. Merz stated in a Bloomberg Television interview on Friday that her investment strategy is predicated on the merger of Tesla and SpaceX. She plans to hold onto her Tesla shares, anticipating a merger announcement within weeks, with completion expected in the first half of 2027.
The speculation surrounding a Tesla-SpaceX merger has intensified, particularly after SpaceX's IPO. SpaceX's stock surged significantly, with its market capitalization reaching $2.64 trillion, surpassing Tesla's valuation. This growth has fueled discussions among analysts and investors about a potential consolidation of Elon Musk's companies. Jefferies cut its Tesla price target to $375, cautioning that Tesla could trade as a SpaceX proxy amidst increasing merger speculation, and noted a disconnect between Tesla's valuation and its estimates.
Prominent investor Chamath Palihapitiya echoed the sentiment of a looming consolidation phase for Musk's ventures, citing SpaceX's $60 billion all-stock acquisition of Anysphere as evidence of Musk's strategic deal-making. Wedbush Securities analyst Dan Ives also anticipates a merger next year, suggesting it would allow Musk greater control over the AI ecosystem. However, a potential merger faces challenges, including the fact that while SpaceX's IPO was successful, the company reported a $4.9 billion loss last year, primarily due to AI build-out costs, contrasting with Tesla's long-standing cash-flow positive status and $45 billion cash reserve.
Concerns have also been raised by some Tesla investors about potential dilution of their stakes if a merger occurs, especially given SpaceX's rapid valuation increase. They might advocate for delaying a merger until SpaceX's lockup periods expire and its valuation stabilizes. Despite these concerns, legal experts suggest that challenging a merger in Texas, where Tesla recently relocated its legal domicile, would be difficult for shareholders, requiring proof of intentional misconduct or fraud. Observers like Beth Kowitt believe that if Musk decides to proceed, investor opposition is unlikely to deter him, and the combined entity could rival Nvidia Corp. in value.
