Musk Super Complex: SpaceX + xAI…… + Tesla?
Elon Musk's SpaceX officially merges with xAI, and the market is focused on Tesla's future. After the acquisition of xAI, the combined valuation is approximately $1.25 trillion. Musk stated that this move aims to create the world's most ambitious innovation engine, leveraging satellite networks to drive AI applications. The possibility of a merger between Tesla and SpaceX has sparked heated discussions on Wall Street, with analysts predicting further integration within the next 12 to 18 months
The two private giants under Musk officially merged, and the market's attention quickly turned to the last piece of the puzzle—Tesla.
According to news from the Chasing Wind Trading Desk, SpaceX recently announced the acquisition of Musk's artificial intelligence company xAI. This move comes as SpaceX plans to conduct its first IPO around mid-year. HSBC's latest research report indicates that this transaction will value the merged entity at approximately $1.25 trillion, with SpaceX valued at about $1 trillion and xAI valued at around $250 billion.
Musk confirmed this news on the SpaceX website, stating that the aim is to create "the most ambitious vertically integrated innovation engine on Earth (and beyond)." In a blog post, he elaborated that the grand goal is to drive AI applications by "harnessing the full energy of the sun" through satellite networks, thereby "accelerating humanity's future."
This significant news quickly triggered a chain reaction in the capital markets, shifting focus to Tesla. Subsequently, the probability of the contract on the prediction market Polymarket regarding "Tesla and SpaceX announcing a merger before June 30" surged from around 15% before the news confirmation to about 24%.
Although Tesla's stock price only saw a slight increase at Tuesday's close, discussions about its future ownership have become one of Wall Street's hottest topics.
Tesla: The Last Piece of the Puzzle?
Tesla disclosed a $2 billion investment in xAI during its fourth-quarter earnings call, emphasizing AI-related opportunities such as Robotaxi and humanoid robots.
Wedbush analyst Dan Ives wrote in a report on Tuesday that "over time, the likelihood of Tesla ultimately merging with SpaceX/xAI in some form is increasing."
He believes that "Musk wants to own and control more of the AI ecosystem, and step by step, the holy grail may be to combine SpaceX and Tesla in some form within the next 12 to 18 months, providing a connective organization for these two disruptive tech giants seeking to lead the AI revolution."
Investopedia reported that speculation on social media is also rampant. Some users pointed out that if Musk acquires the stock code "X" from the former U.S. Steel Company on the NYSE, it might be to prepare for the merger of Tesla with SpaceX/xAI.
HSBC: Capital Demand May Be Key to Integration
Amid the market's heated discussions on business synergy, HSBC released a recent research report providing a more rational analysis from the perspective of capital demand.
HSBC analyst Michael Tyndall, in a report titled "The Questions Raised by SpaceX's Acquisition of xAI—Will TSLA Join?" pointed out that while there is no conclusion on whether a merger will happen, "we suspect the answer lies in the demand for capital." HSBC's report cites Bloomberg data stating that the exchange ratio for this merger is 0.1433 shares of SpaceX for every 1 share of xAI.
Analysts point out that Tesla plans to double its capital expenditures (Capex) year-on-year by 2026, suggesting that this high level of investment will continue for some time and will require financing through "other means."
Therefore, whether it is the massive investment required for xAI to compete with OpenAI or the construction of the space solar energy supply chain, a large amount of incremental capital is needed. The report suggests that bundling the three companies (SpaceX, xAI, Tesla) may become a solution.
The report mentions that Musk stated at the shareholder meeting: "I really want to figure out a way for Tesla shareholders to participate in SpaceX."
HSBC analysts concluded that, given the significant demands on CEO Musk's attention from these three ventures, integrating them may even be the preferred "management alternative" for some shareholders.
Key Issues Facing the Merger: Valuation Mismatch
Despite the grand vision for the merger, Wall Street is not entirely on board. Gary Black, co-founder of Future Fund Active ETF, pointed out a key issue facing a full merger: valuation mismatch.
"The math is very straightforward," Gary Black stated. He estimates that Tesla's current trading price is about 200 times its projected earnings for 2026, while SpaceX's trading price at its current valuation is close to 400 times.
This means that to merge at the existing valuations, Tesla would need to issue about 35% more shares.
Black warned: "Many existing institutional shareholders of Tesla may hesitate at the uncertainty of 25% profits from space travel/communication and may sell their (Tesla) shares."
Building a "Space Cloud": The Business Logic of the Merger
The initiatives of SpaceX and xAI are not without precedent, and their core logic lies in the combination of computing power and energy.
According to Barron's, SpaceX is planning to establish a "space cloud" consisting of up to 1 million satellites, aimed at utilizing the vacuum environment of space and solar energy to address the power supply and cooling bottlenecks faced by ground-based AI data centers.
James Bruegger, Chief Investment Officer of space technology investment firm Seraphim Space, stated in an email: "Elon Musk's plan is to use this deal to support SpaceX's future ambitions in the public market and help fund a satellite-based data center constellation, highlighting the enormous scale of future plans." "If SpaceX is evolving into an AI data center company, then merging it with xAI, which has a valuation of about $200 billion in recent funding rounds, makes commercial sense."
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