Tesla and SpaceX Form Merger Committees as Analysts See 20% to 35% Premium
Key Facts
Tesla and SpaceX have formed special committees of independent board members to discuss a potential merger, Elon Musk said during SpaceX's third-quarter 2026 earnings call, the Associated Press reported. The talks on combining the companies come ahead of Tesla's quarterly results, with any deal remaining subject to shareholder approval. Musk said the committees were formed at shareholders' request, according to Reuters. But he cautioned against treating a merger as a foregone conclusion, saying: "I think that would be an overstatement." He cited chip design, robotics and connectivity among areas of cooperation supporting the case for combining the companies' businesses.
The special committees are holding discussions without Musk, who said his conflicts of interest prevent him from joining them. "Because I am a conflicted party, I cannot actually participate in the discussions," he added, according to Reuters. On Tesla's side, he said approval requires a majority of all shares, rather than just a majority of shares voted. Under that requirement, not voting effectively counts against the deal, he explained. The share exchange ratio between the companies has yet to be negotiated, with Musk saying: "No ratio has been negotiated." Meanwhile, analysts at RBC and JPMorgan expect investors to demand a premium of between 20% and 35%, according to Reuters.
Musk's comments came as SpaceX reported quarterly revenue of $14.6 billion, according to the Associated Press, citing the company's results. Revenue rose 161% from the same period a year earlier. The company swung to a quarterly net profit of $4.4 billion after posting a loss a year earlier. Tesla already holds an investment in SpaceX, having formally disclosed the completion of an investment of about $2.00 billion to buy shares in the company. The disclosure said the purchase was completed on March 12, 2026, and comprised Class A common shares in SpaceX.
For Tesla, analysts' average revenue forecast for the third quarter of 2026 is about $28,341 million, according to consensus estimates published on the company's investor relations website. Analysts expect adjusted earnings per share of $0.45 on a non-GAAP basis. Under generally accepted accounting principles, the average earnings-per-share forecast is $0.23 for the same period. On gross profitability, the analyst consensus puts the expected gross margin at 17.9% of quarterly revenue. Their average operating margin forecast is 2.5%, according to the financial estimates Tesla published ahead of its results.
Automotive leads revenue expectations for Tesla's businesses, with an average estimate of $20,272 million for the third quarter, according to the analyst consensus published by the company. Average expected revenue for the energy generation and storage business is $3,720 million for the same period. Tesla previously reported production of 464,391 vehicles during the quarter in its statement on production, deliveries and energy storage deployments. Quarterly deliveries totaled 486,532 vehicles, exceeding the number produced during the period, according to the company's figures. In its energy business, the company said it deployed energy storage products with a total capacity of 13.7 gigawatt-hours during the third quarter.
On cash flow, analysts expect Tesla to report positive operating cash flow of $3,267 million for the quarter, according to the consensus published by the company. That compares with an expected capital expenditure outflow of $7,771 million, exceeding the cash expected to be generated from operations. The average free cash flow forecast is negative $4,506 million for the third quarter of 2026. Tesla is scheduled to release its financial results for the quarter after the market closes on Wednesday, October 21, 2026, according to its investor relations statement. Its live question-and-answer webcast begins on the day of the results at 5:30 p.m. U.S. Eastern time.