Barclays analyst Dan Levy thinks Tesla (TSLA) and SpaceX (SPCX) could announce a merger before Tesla’s annual meeting on Dec. 3. He expects SpaceX to buy Tesla in an all-stock deal. The two are jointly developing Terafab, a giant chip plant Musk says both businesses need for their AI plans. Barclays also points to other overlaps, like Starlink in Tesla cars, xAI software for robotaxis, and Grok, part of SpaceX's growing AI business, for Optimus robots. Levy believes “the true value would be in vertical integration.” Musk hinted at this on Tesla’s Q2 call, saying, “There’s more and more overlap, especially with Terafab.”
Control may be the bigger motive. Musk has long said he wants about 25% voting control of Tesla. Under Barclays’ math, a deal would give him about 37% of the combined company and roughly 56% of the votes, thanks to SpaceX’s dual-class shares.
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Why Washington Could Shape This Deal
A deal would need approval from both boards and both sets of shareholders, plus an antitrust review. Barclays also flagged possible national security questions, given SpaceX’s heavy work with the U.S. government. Congress doesn’t approve mergers, but the party that controls the House runs the committees that hold hearings and investigations. I think Musk would rather face a Republican House after the November midterms, as he tries to merge two companies. Prediction market Polymarket, though, puts the odds of a merger by year-end at just 18%.
What a Buyout Could Mean for Tesla Holders
Tesla is worth $1.40 trillion, and SpaceX $1.98 trillion. With no premium, each Tesla share would swap for about 2.5 SpaceX shares, leaving Tesla holders with roughly 41% of the combined company. A typical 20% to 40% takeover premium would value each Tesla share at about $442 to $515, based on its $368 price. Barclays, however, expects any premium to be factored into the deal terms, and with Musk on both sides, there’s less pressure to pay up.
About SpaceX Stock
SpaceX has come a long way since its 2002 launch, evolving from a rocket startup into the world’s most active launch provider and the largest space company. Falcon 9 has been a major reason for that success. Moreover, SpaceX is no longer just about rockets. Starlink has become a crucial part of the story, with estimates suggesting the satellite-internet business generates 50% to 80% of SpaceX’s total revenue. Founded in 2002, the company is headquartered in Starbase, Texas.
SpaceX may be moving at rocket speed as a business, but SPCX stock has taken a much less predictable path since its June 12 debut. The shares opened at $135 and quickly caught fire, climbing above $200 and reaching $225.64 by the second trading session. Then reality set in. Investors started questioning whether the lofty valuation left enough room for future growth, while upcoming insider lockup expirations added another layer of uncertainty. The stock is down 7% since its IPO, underperforming the iShares US Aerospace & Defense ETF’s (ITA) decline of 3%.
www.barchart.com The bigger question is what kind of stock Tesla holders would end up owning. Tesla trades at 203x forward earnings, while SpaceX trades at over 5,000x, since it barely earns a profit. By 2028, though, SpaceX’s price-to-earnings (P/E) drops to about 33x versus about 115x for Tesla, as its earnings are expected to grow faster. Back in June, before SpaceX went public, I made the case for selling Tesla to buy SpaceX. A merger would make that choice for shareholders.
It would also change Cathie Wood's math. ARK sees Tesla worth $17.5 trillion by 2031, or about $4,400 a share. That's about double the top market value target in Musk's own pay package. I think that's too aggressive. Either way, Tesla holders would keep only about 41% of that upside in a combined company.
A Snapshot of SpaceX’s Q3 Numbers and Outlook
SpaceX reported its third-quarter fiscal 2026 earnings on Oct. 20. SpaceX reported a bigger quarterly profit than expected as its satellite communications and artificial intelligence businesses boomed. It reported a profit of $4.4 billion, reversing a year-ago loss and comfortably beating Wall Street’s expectations. Revenue soared to $14.6 billion, up 161%. The company ended the third quarter with 1.7 gigawatts of nameplate compute capacity, with additional data halls already online in early October.
Looking forward, SpaceX now sees total company revenue in the range of $33 billion to $37 billion for Q1 of 2027. Moreover, CFO Bret Johnsen reiterated that the company is on track to deliver its previously stated goal of $100 billion in ARR by the end of this year. Capital expenditures for the fourth quarter are expected to be between $35 billion and $40 billion. This is due to the additional capacity coming online this quarter.
What Do Analysts Expect for SPCX Stock?
Overall, analysts are cautiously optimistic about SPCX stock and have given a consensus rating of “Moderate Buy.” Out of 40 analysts covering SPCX, 26 have a “Strong Buy” rating, three have a “Moderate Buy” rating, eight have a “Hold” rating, one has a “Moderate Sell” rating, and two have a “Strong Sell” rating. The mean target price of $244.43 indicates a potential upside of about 64% from current levels. The high price target of $800 is quite impressive and implies an additional 437% upside from the current share price.
www.barchart.com On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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