The financial world is abuzz with a radical theory regarding the future of Elon Musk’s empire. While Wall Street has long anticipated a blockbuster SpaceX IPO, billionaire investor Chamath Palihapitiya and a bullish Wall Street analyst are suggesting a far more disruptive path: a merger into Tesla.
The No IPO Prediction
Chamath sparked intense debate by calling the absence of a SpaceX IPO his “most contrarian take for 2026.” He argued that instead of a traditional public offering, Musk will orchestrate a reverse merger, effectively folding SpaceX into Tesla. This move would allow Musk to consolidate control and power of his two seminal assets into one cap table.
The Rationale
There are several reasons why a merger between Tesla and SpaceX could make sense:
- Consolidation of Power: Chamath believes Musk wants to collapse his “two seminal assets” into a single cap table to solidify control and avoid the dilution of a standard IPO.
- Valuation Arbitrage: Musk could supercharge Tesla’s valuation, moving it toward a $3 trillion conglomerate by merging it with SpaceX.
AI Ecosystem View
Dan Ives of Wedbush Securities echoed the sentiment, viewing the separation of Musk’s companies as increasingly artificial. Ives said there is a “growing chance” Tesla will be merged into a combined SpaceX-xAI entity. The growing AI ecosystem will focus on Space and Earth together, and Musk will look to combine forces.
Recent Moves
Recent moves, including the SpaceX-xAI merger, which created a $1.25 trillion entity focused on orbital compute, support this perspective. Tesla recently disclosed that it will invest approximately $2 billion into xAI, framing the move as a cornerstone of its Master Plan Part IV. The two companies also signed a framework agreement to explore collaborations, which Tesla said will help scale its autonomous and robotic technologies.
Tesla Investor Dilemma
While the consolidation could solve funding needs for Mars colonization, it presents some risks:
- Pure-Play Loss: Many investors prefer pure-play stocks and a merger could muddy the waters, potentially forcing institutional funds to sell Tesla shares if they are not permitted to hold aerospace assets.
- Regulatory Scrutiny: Such a massive merger would face unprecedented antitrust and SEC hurdles, particularly given Musk’s 42% ownership of SpaceX and his ~13% stake in Tesla.
Tesla investors will be watching for more evidence of a pending SpaceX IPO or more investment and consolidation within Musk’s companies. As the situation unfolds, one thing is clear: the future of Elon Musk’s empire will be closely watched and heavily scrutinized.