Shares of Tesla Inc NASDAQ: TSLA they’ve had a solid couple of weeks since last month’s multi-month low. The stock is up more than 30% since the start of April and is currently trading around $440, bringing it back to an area not long ago that was out of reach.
The extensive bull case surrounding full self-driving (FSD), robotaxis, and Optimus has been well documented, and the company’s latest earnings report did little to dampen the excitement. However, a new and more important story is beginning to take shape, one that could redefine Tesla as a company.
Rumors Are More Real Than They Look
In the past few weeks there have been rumors building about something really explosive. Reports have surfaced that Elon Musk has been discussing with his colleagues about merging Tesla and SpaceX. NASDAQ: SPCXhis spacecraft and satellite company. Yes, that’s SpaceX, which is set to go public sometime in the coming weeks, in what could be the largest IPO in history.
If that wasn’t enough to get Musk’s fans excited, perhaps the fact that the merger with Tesla will make the resulting company one of the most important mergers ever will do the trick.
Wedbush analyst Dan Ives, one of the most bullish voices on Tesla, believes that’s where things are headed. In a recent letter to clients, he put the chances of consolidation in early 2027 at 80-90%, arguing that the foundation is already solid. His theory is that Musk wants to own and control more of the AI ecosystem, and that merging SpaceX with Tesla is the next logical step in a strategy he’s actually been using for years.
Musk Has Done This Before
What gives the theory of integration real credibility is not mere speculation; it is the pattern that comes before it. Not only has Musk shown a tendency, if not an outright strategy, to move engineers between his companies, but he also has a well-established history of quietly integrating the companies he controls behind the scenes.
For example, earlier this year, Tesla invested $2 billion in Musk’s xAI company, which had acquired X (formerly Twitter) last year when Musk bought it. Musk’s company SpaceX has since acquired xAI, meaning Tesla shareholders already have a major link to SpaceX sitting on their balance sheet, without the formal merger having taken place.
That is a deliberate and well thought out series of activities. Each step brought Tesla and SpaceX closer together operationally and financially, quietly laying the foundations for something big. Add in Terafab’s integrated semiconductor manufacturing facility currently under construction, which will produce chips for both companies, and the possibility of the two entities being deliberately merged becomes hard to ignore.
The Bull’s Case is Exciting
For Tesla bulls, the appeal of the merger is straightforward. In addition to generating high investor hype with its pending IPO, SpaceX is bringing the Starlink satellite infrastructure, advanced AI capabilities with xAI, and a second rocket business. Combined with Tesla’s established manufacturing scale, growing energy storage technology, and robotic ambitions, the resulting company would be a sight to behold; a vertically integrated AI and technology conglomerate that includes energy, transportation, space, and computing.
Dan Ives has described it as the “holy grail” of Musk’s empire-building dreams, and if you put the combined power on paper, it’s not hard to see why he uses that language.
A Long Shot Worth Watching
The risk, however, is real, and there are already many voices crying wolf about SpaceX’s estimated $1.7 trillion valuation. It’s not hard to imagine that Musk will have enough on his plate to make that a success.
Prediction markets, which have become increasingly popular for their forecasting accuracy, are also much lower than Ives, with the current odds of meeting before May 2027 only around 33%. The question of valuation is also important, as both companies trade at high multiples and a merger between them presents significant operational risks. That’s if the deal ever goes through, given the kind of legal scrutiny it would attract, not to mention the inevitable shareholder battles.
All that said, it makes for fun reading, and if there’s one man who can pull it off, it’s Musk. For investors who believe in his long-term vision and track record of finally delivering on ideas that initially seemed impossible, the direction to go here is hard to dismiss.
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