SpaceX rises 8% as independent committees explore potential Tesla merger
Key Facts
SpaceX shares rose 8% and Tesla shares gained 3.5% in early afternoon trading on 21 October 2026 after talks on a potential merger between the companies were disclosed, according to the Associated Press. Elon Musk said each company had formed a special committee of independent board members to discuss combining their businesses. The formation of the committees moves the potential merger into discussions conducted by independent directors, with completion of a deal still uncertain. Musk cautioned against assuming a merger was certain, saying that "would be overstating it," according to the agency. Reuters, via Investing.com, reported that the committees had not agreed on deal terms. Its report said "no exchange ratio has been negotiated," leaving the consideration shareholders might receive unresolved.
In a separate banking assessment, Investing.com reported that JPMorgan raised its price target for SpaceX shares to $500 from $240 on 21 October 2026. The website added that the bank maintained its overweight rating alongside the price target revision. It also reported a hypothetical framework drawn up by the bank for a potential merger, including a premium of between 30% and 35% on Tesla shares. That premium relates to JPMorgan's deal scenario and is neither an offer agreed between the companies nor consideration approved by the committees. The bank's premium estimate therefore remains separate from negotiations that Reuters said had not yielded a share exchange ratio.
JPMorgan cited shared engineering capabilities and artificial intelligence infrastructure in outlining the strategic rationale for combining the companies, according to Investing.com. The bank also included the "Terafab" chip facility in Texas among the elements supporting its potential merger scenario. Those elements place engineering, computing and chip manufacturing at the heart of the bank's rationale for combining the businesses. In its forecasts for SpaceX, JPMorgan estimated annual revenue of $254 billion during 2027, according to the same website. It also projected computing capacity would reach 10 gigawatts by the end of that year, an estimate of capacity at the end of the period alongside its full-year revenue forecast.
The discussions on combining the companies come against a backdrop of reported earnings and capital expenditure for the third quarter of 2026. Investing.com reported that SpaceX's earnings totaled $4.4 billion during the quarter, while its capital expenditure rose to $19.6 billion. The website said "earnings totaled $4.4 billion, while capital expenditure climbed to $19.6 billion," putting spending above earnings for the same period. For Tesla, the Associated Press cited the company as reporting quarterly net income of $787 million in the third quarter of 2026. Net income fell 44% from the same period a year earlier, leaving the company entering potential merger discussions following a year-on-year decline in earnings.
On governance, Musk said he was the largest shareholder in both companies and could not communicate with the committees or access their discussions, according to the Associated Press. Investing.com, reporting his comments, said any deal would require support from shareholders representing 50% of Tesla's total outstanding shares. On regulation, JPMorgan analyst Rajat Gupta identified Chinese approval as the "biggest hurdle" to a merger, according to the website. Gupta proposed ring-fencing Tesla's China business or transferring control of it among the options for addressing that hurdle. Those options remain the analyst's proposals for addressing regulatory approval of the potential deal. As a next step, Reuters said analysts were awaiting disclosures on the merger talks in regulatory filings ahead of Tesla's annual shareholder meeting scheduled for 3 December 2026.