The financial world is abuzz with a radical theory regarding the future of Elon Musk’s empire. While a blockbuster SpaceX IPO has long been anticipated, a merger with Tesla is being suggested by billionaire investor Chamath Palihapitiya and a bullish Wall Street analyst.
The No IPO Prediction
Chamath Palihapitiya has sparked intense debate by calling the absence of a SpaceX IPO his “most contrarian take for 2026.” He believes 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 over his two seminal assets into one cap table.
The Rationale
There are several reasons why a merger between Tesla and SpaceX could be beneficial:
- Consolidation of Power: By merging the two companies, Musk can solidify his 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 has echoed the sentiment, viewing the separation of Musk’s companies as increasingly artificial. He believes that there is a “growing chance” Tesla will be merged into a combined SpaceX-xAI entity. This 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 the idea of a merger. Tesla has also 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 have signed a framework agreement to explore collaborations, which will help scale Tesla’s 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, it will be interesting to see whether the ambitions of Tesla and SpaceX will ultimately merge into one entity.