Speculation about a merger between SpaceX and Tesla has intensified after SpaceX President and COO Gwynne Shotwell acknowledged the possibility in a June 12 interview with CNBC. Shotwell stated that combining the two companies “might make Elon’s life a little easier” and noted “synergies” and a “convergence” of future goals. The remarks come just after SpaceX completed the largest IPO in U.S. history on June 12, raising $75 billion, though the stock subsequently lost $400 billion in market value in its first week of trading.
Morningstar analyst Seth Goldstein wrote in a June 9 research note that “we wouldn’t be surprised to see a [merger] deal occur within a year of the SpaceX IPO.” Goldstein pointed to both companies’ heavy investments in artificial intelligence and their shared AI supply chain as factors that make a combination logical. Tesla’s share price, which closed at $406 on the day of SpaceX’s debut, has since fallen to around $385, representing a roughly 16% year-to-date decline.
Clint Sorenson, CEO and CIO of Texas-based Ascentis Asset Management, warned that an all-equity merger would create significant dilution and position-size challenges for advisors. “Most advisor portfolios are already overweight a handful of mega-cap tech names through their benchmarks, and a merger like this only compounds that,” Sorenson said. He added that client discussions have framed a potential merger as a “long-term possibility, not an imminent event.”
Sorenson also highlighted the concentration of risk across Musk’s ventures. “These businesses sit at the convergence of three megatrends—deglobalization, AI, and energy dominance—and they share the same risks too,” he said. “A collapse in AI-related demand and a popping of the current valuation bubble, driven in part by passive investing and price-taking, would be problematic for all of them at once.” He noted a “glaring key-man risk tied to a one-of-a-kind mind,” comparing Musk to Warren Buffett but with a growth-investor orientation.
According to The New York Times, experts expect SpaceX, as the larger company by market valuation, would offer to trade its shares for Tesla shares to form a new entity. Both companies are domiciled in Texas, where state law would require two-thirds of Tesla shareholders to approve a merger. Musk already controls about 20% of the votes. A combined company would be valued at roughly $4 trillion, spanning rocket building, AI, Starlink satellite internet, electric vehicles, battery production, solar energy, and the social media platform X.
Jacob Tally, an advisor at Seattle-based RIA Prospero Wealth, suggested that clients considering investing in anticipation of a merger should ask whether “a merger might already be priced into the stock.” He noted that Musk has a precedent for consolidating his businesses, such as when xAI was acquired by SpaceX in February. “I don’t think anyone would be surprised by a [SpaceX-Tesla] merger at this point,” Tally said.
For advisors, the key takeaway is the need to manage concentration risk. Sorenson’s approach is systematic: “If the position breaches the limits in the client's investment policy statement, we hedge or trim.” As the market digests SpaceX’s volatile debut and the prospect of a mega-merger, advisors are urged to revisit portfolio allocations and discuss the implications with clients. For more on the SpaceX IPO and its market impact, see SpaceX Shares Surge 57% Above IPO Price; Rinehart Builds $1B Stake and Leveraged ETFs Tied to SpaceX's Record $75B IPO Set to Debut Next Week.
