I Wouldn't Buy Tesla Stock Betting on a SpaceX Deal. Here's Why.
SpaceX is growing far faster. But how much of a combined company would the EV maker's shareholders own?
Tesla and SpaceX officials are considering a possible merger, but the prospects for the deal look dim. Elon Musk, the CEO of both companies, is barred from leading the talks due to conflicts of interest. While SpaceX has been expanding rapidly, Tesla's financial performance has been disappointing. If both companies were to combine, Tesla shareholders would only own about 43% of the combined entity.
This ownership would result in twice the operating income of Tesla alone, but only if a specific quarter's results hold. However, SpaceX's debt, capital spending, and lower valuation metrics make the deal less appealing. Tesla's high valuation and the uncertainty surrounding the deal make it an unattractive option for investors.
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