Elon Musk said he is actively considering a merger between Tesla and SpaceX, The Guardian reported, disclosing that boards at both companies have established special committees to evaluate the plan. He made the remarks during SpaceX's earnings call, while Tesla is due to report its own quarterly results. Wall Street projected Tesla to report revenue of $27.9bn and earnings per share of 43 cents for the quarter, down from revenue of $28.23bn in the prior quarter.
Musk said he is excluded from the special committee discussions because he leads both companies, describing himself as a conflicted party. He said the committees have not yet agreed on any transaction terms and that there is no guarantee they will. A merger would require approval from at least 50% of all Tesla shareholders, not just those who vote, which Musk described as a high hurdle.
Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion. A combined entity would be worth approximately $3.5 trillion.
Musk said the merger would make sense given both companies' shared work on chips, artificial intelligence and software, pointing to potential gains from working together on superintelligence software, chip design, robotics and orbital data centres. Tesla and SpaceX launched a joint chip manufacturing venture called Terafab.
SpaceX generated overall revenues of $7.5bn in the most recent three-month period, up from $813m in the same period the prior year. Starlink brought in $5.2bn over the three months to 30 September, compared with $3bn during the corresponding period the prior year. For the first nine months of the year SpaceX posted revenues of $27bn, up from $13.7bn, and a loss of $1.1bn, while the most recent quarter alone produced a profit of $4.4bn.
Following Musk's comments on the potential merger, SpaceX shares rose 8% in after-hours trading and Tesla shares rose 2%. Tesla's stock is down more than 11% for the year to date. Forrester principal analyst Paul Miller said Tesla has achieved notable things but continues to fall short of its leaders' more ambitious targets, and that its robotaxi service is carrying passengers but not at the volumes the company had promised.
Tesla shareholders would be required to vote on any proposed merger, with approval needing to reach 50% of all shares outstanding rather than just shares that participate in the vote. The quarterly earnings result will be watched alongside questions about the merger and the company's progress in robotics and autonomous driving, areas where Tesla's strategic direction has shifted rather than vehicle sales alone.
Reporting: The Guardian, Yahoo Finance, BBC
Background: The Guardian, CNBC
Written by Pick & Scroll News from the reporting and documents linked above.
