I Wouldn't Buy Tesla Stock Betting on a SpaceX Deal. Here's Why.

Key Points:

• Tesla and SpaceX boards have each formed independent committees to explore a potential merger, but no agreement or terms have been reached, and Elon Musk is not participating due to conflict of interest.
• SpaceX is growing rapidly with Q3 revenue up 161% year-over-year to $14.6 billion and operating income of $2.8 billion, while Tesla’s Q3 revenue remained flat at $28 billion and operating income dropped 56% to $718 million.
• A combined company would entail significant capital spending, mainly driven by SpaceX’s $48.1 billion investment in the first nine months of 2026, contrasting Tesla’s $13 billion, resulting in negative free cash flow for SpaceX versus positive cash flow for Tesla.
• Tesla shareholders would own about 43% of the merged entity without any premium, but the deal might dilute Tesla’s cash-generating advantage and increase exposure to SpaceX’s high spending and losses.
• Given Tesla’s high valuation and current market prices, a merger does not clearly enhance value for Tesla shareholders, and approval from both companies’ shareholders, including Musk’s controlling stake in SpaceX, would be required.