The Case Against a SpaceX and Tesla Merger
While we don't know what terms, if any, are on the table for a potential merger, there's a strong case that now isn't the best time for Tesla (NASDAQ: TSLA) to pursue a merger with Space Exploration Technologies (NASDAQ: SPCX) . The argument rests on two main ideas. First, it runs contrary to market trends; second, Tesla is on the cusp of delivering significant shareholder value after years of disappointment. Over the last decade, the major trend with industrial conglomerates such as General Electric, United Technologies Corporation, Honeywell , 3M , Danaher , Johnson Controls , and Emerson Electric has been to break them up. While each company had its own circumstances, three themes apply to all: Given the incredible complexity inherent in managing Tesla (EVs, robotaxi/Cybercab, Optimus, energy generation/storage, charging infrastructure, and a host of investments in building its own supply chain) and SpaceX (launch services, artificial intelligence (AI) infrastructure, Starlink, defense networks), it's not hard to see how complex a merged entity would become. Continue reading