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Analysis

SpaceX Starts Trading This Week. Musk Is Already Talking About Merging It With Tesla.

SpaceX is expected to begin trading Friday as the largest IPO in history. Elon Musk has reportedly discussed combining it with Tesla. Tesla shareholders could gain exposure to Starlink and rockets. Or they could get folded into an Elon-controlled empire.

Market MunchiesΒ·Jun 8, 2026Β·3 min read
Tesla & SpaceX

SpaceX is expected to price Thursday and begin trading Friday, the largest IPO in history. Tesla is trading around $391, down sharply from its December 2024 peak. Elon Musk controls both companies. And according to CNBC, which first reported the story, he has discussed with close colleagues the possibility of folding them together into a single entity.

No merger has been announced. No formal process has started. But the financial relationships between the two companies are already deep, and the chatter is serious enough that Tesla shareholders need to understand what a deal would actually mean for them.

The question is not whether the combined company would be valuable. It almost certainly would be. The question is whether Tesla shareholders would get fair terms in a transaction where Musk sits on both sides of the table and controls 85% of SpaceX's votes.

Why Tesla shareholders should care

  • SpaceX gives Tesla holders potential exposure to Starlink's $11.4 billion in annual revenue, the launch business that controls 83% of mass sent to orbit, and xAI's data center infrastructure
  • But Musk controls SpaceX through a dual-class share structure giving him 85% of votes
  • A merger would hinge entirely on the stock-swap ratio and who determines whether it is fair
  • The risk is not whether the companies fit together. The risk is whether Tesla holders get fair value for what they are giving up.

These companies are already doing business together

Tesla and SpaceX are not independent entities. They are already deeply intertwined.

Per the SpaceX S-1, SpaceX and xAI purchased $697 million worth of Tesla Megapack energy storage systems across 2024 and 2025 to power AI data centers, along with another $34 million in early 2026 and $131 million in Tesla Cybertrucks in 2025. Tesla and SpaceX share engineers and collaborate on power and compute infrastructure. Musk himself posted on X in November 2025: "My companies are, surprisingly in some ways, trending towards convergence."

A formal merger would simplify these transactions under a single corporate roof. It would also concentrate them under a governance structure that public shareholders would have limited ability to challenge.

Why Tesla holders might like the deal

The optimistic case is straightforward.

Tesla shareholders would gain exposure to Starlink's $4.4 billion in operating income, SpaceX's launch dominance, and xAI's AI computing platform. The combined entity would span rockets, satellites, electric vehicles, AI infrastructure, and energy storage, ranking instantly among the most valuable public companies in the world.

Tesla's own business has shown genuine signs of recovery. Q1 2026 revenue came in at $22.39 billion, up 15.78% year-over-year, with automotive gross margins expanding to 21.1%. Cybercab production has begun at a sub-$30,000 price point. If Tesla's operational turnaround continues alongside SpaceX's growth, the combined entity could be worth more than the sum of its parts.

Why Tesla holders might hate it

The pessimistic case is harder to dismiss.

Electrek's analysis notes this would be the fourth major inter-company transaction Musk has orchestrated between his controlled entities: SolarCity, Twitter/X, xAI, and now potentially SpaceX. Tesla shareholders are already suing Musk for breach of fiduciary duty over Tesla's $2 billion SpaceX equity investment, made after shareholders had previously pushed back on similar moves.

The governance structure is the core problem. SpaceX is going public as a controlled company. Its Class B shares carry ten votes each versus one for Class A shares, with Musk holding roughly 85% voting power. A merger would bring Tesla shareholders into that structure, where they would have less recourse than they currently do.

Columbia professor Matthew Ewens put the practical risk directly: "Tesla shareholders with concerns about the merger will have trouble getting out post-merger if it occurs close to the IPO."

One other analyst framed Musk's history plainly: "His history has often been to combine a weak company with a stronger one." Whether Tesla is the weak company in this pairing depends on your view of a struggling automaker versus a profitable satellite internet business. But the question is worth asking.

The questions that decide everything

For a merger to proceed, several unresolved structural questions would need answers.

Which company is the surviving entity? How is the stock-swap ratio determined, and who decides whether it is fair to both shareholder bases? What independent process protects Tesla minority shareholders in a transaction where Musk controls the other side? Legal experts told CNBC the deal would likely not raise antitrust concerns, given that the companies operate in different core industries. The fairness and governance questions are harder.

Under SpaceX's controlled-company structure, many of the standard shareholder protections do not apply in the same way. A special committee of independent directors would typically evaluate deal terms. Whether that committee would have genuine independence in a Musk-controlled entity is the question no one has answered yet.

The bottom line

A Tesla-SpaceX merger might make strategic sense. The companies already share engineers, transactions, and a chief executive. The combined entity would be extraordinary.

But strategic logic and shareholder value are different things. The only factors that matter for Tesla holders are the exchange ratio, the governance structure, and whether independent shareholders have any real power to push back on terms they do not like.

The party proposing the merger controls 85% of SpaceX's votes. Tesla shareholders control the rest. That asymmetry is the whole story.

Sources