On the day of SpaceX’s highly anticipated IPO, president Gwynne Shotwell hinted at a move many analysts increasingly expect—that Elon Musk’s two public companies will someday merge to form a Musk empire.
In an interview with CNBC, she said a megamerger “might make Elon’s life a little easier, actually.”
“There’s no question that there’s synergies between Tesla and SpaceX in our futures, definitely. There’s a convergence of a kind of what we’re all trying to accomplish in the future,” Shotwell added in the interview.
Shotwell didn’t elaborate on the specific synergies that exist between Tesla and SpaceX, but the two companies are already collaborating in some areas, including jointly running Musk’s planned $55 billion “Terafab” facility, which will produce chips for robotics and space travel. SpaceX has also previously spent millions on Tesla technology, including $506 million worth of Tesla Megapack power cells and $103 million on Cybertrucks for SpaceX facilities.
Musk has a history of combining his companies. In 2016, Tesla shelled out $2.6 billion worth of shares to acquire SolarCity, a solar energy company run by his cousins Lyndon and Peter Rive, in which he had a 22% stake and served as chairman. Later, after buying social media website X, formerly Twitter, he merged it with his AI company xAI in a deal valued at $50 billion. In February, SpaceX acquired xAI and X.
As SpaceX makes history with its IPO Friday, Shotwell noted that combining Musk’s two public companies may not happen in the near term: “Right now I’m focused on keeping the lights on here.”
Still, Shotwell’s comments lend more evidence that a merger between the two companies could come in the future. Some analysts already see the tie-up as inevitable. Wedbush senior equity research analyst Dan Ives claimed in a note earlier this week that merging the two companies would be a “holy grail” move that would allow Musk to control more of the AI ecosystem.
The Tesla bull sees more than an 80% chance they will merge. Part of the reason is that the two companies have already started laying the groundwork for a potential tie-up.
In January, Tesla made a $2 billion investment in xAI. A month later, when SpaceX acquired xAI in an all-stock deal valued at $250 billion, Tesla’s $2 billion stake converted to nearly 19 million shares, noted Ives.
SpaceX debuted at a starting price of $152, and quickly rose to $173, well above the IPO price of $135. Therefore, Tesla’s stake is now worth about $3.29 billion, a roughly 64% paper gain.
“Historic moment for Musk, the markets, and SpaceX. Watershed event,” Ives added in a comment to Fortune.
Yet Tesla’s stake could rise in value in the coming days, especially as analysts predict that the company’s stock price is set to skyrocket even higher.
Timothy Horan of investment bank and financial services firm Oppenheimer has set a price target of $190.
Merging Tesla and SpaceX could create one of the biggest companies in the world. Already, SpaceX’s valuation of more than $2.3 trillion makes it the seventh largest company in the world by market cap and one of only 14 other companies worth more than $1 trillion.
Tesla, for its part, is neck and neck with Meta for the title of 10th largest company in the world, with a market cap of $1.5 trillion.
Some quick math shows that a combined SpaceX-Tesla giant could potentially be worth more than $3 trillion, leapfrogging the likes of Amazon and Microsoft to become the fourth biggest company in the world.
A merger between the two companies is unlikely to face major regulatory hurdles, experts told CNBC, partly because they operate in separate industries. Yet the complex governance issues—like deciding which company would be the parent, who would determine the price of the new company’s shares, as well as the details of a stock swap—would all need to be tackled.
Because of Musk’s 85% voting power at SpaceX, he would not have to worry about pushback from the rocket company’s board. While Musk holds a lower 13% stake in Tesla, a giant pay package approved by shareholders in November would boost his ownership stake in the EV maker to around 25%, if he hits a series of ambitious financial and operational targets over the next decade.
According to Shotwell, Musk is the only one who can run SpaceX, but she also made clear SpaceX is independent of him.
“The company would not collapse, obviously, without Elon, but it would by no means be the same,” she said.
