Tesla and SpaceX Each Form Committee to Explore Merger of Musk Firms
Tesla and SpaceX have each formed a committee to explore combining Elon Musk's two businesses. SpaceX, now valued at almost $1.9 trillion, is already larger than Tesla by market cap. A proposal could come in the near future.
Tesla and Space Exploration Technologies, known as SpaceX, have each formed a committee to explore merging Elon Musk's two companies, a step that could lead to a proposal in the near future. The Elon Musk SpaceX Tesla merger would put electric vehicles, batteries, rocket launches, satellite internet and artificial intelligence (AI) under one roof.
Tesla shares (TSLA) rose 2.91% in the latest session cited, while SpaceX (SPCX) fell 2.33%.
Two very different businesses
SpaceX made its public debut earlier this year. Its market value is now almost $1.9 trillion, which already exceeds Tesla's.
Revenue last quarter was $14.6 billion, up 161% from a year earlier. Connectivity, mainly the Starlink satellite internet service, brought in $5.25 billion, up 69%. AI revenue reached $7.56 billion, up more than tenfold. SpaceX trades at 56 times trailing sales.
Tesla is far bigger by revenue, with more than $100 billion over the past 12 months. But third-quarter revenue was little changed from a year earlier as it struggles to keep scaling its electric vehicle business. Self-driving cars and humanoid robots have yet to contribute financially.
Tesla trades at 13 times sales and 417 times earnings. Its earnings before interest and taxes peaked at nearly $15 billion in late 2022 and have since fallen to $3.63 billion.
Added together, the two companies are worth nearly $3.5 trillion. One investment analysis argues that earnings would have to grow enormously by 2030 to justify that figure, and that a $10,000 stake in the combined company is more likely to be worth less than more.
Spectrum deal adds a regulatory test
Separately, the Federal Communications Commission (FCC) announced on November 10 that it had accepted a filing from Musk's Starlink Spectrum Holdings. The company wants to buy 800 MHz Specialized Mobile Radio Service licenses from investment firm Grain Management. The deal could carry an $8 billion price tag.
Musk called the licenses "the last critical piece of the spectrum puzzle needed for SpaceX (NASDAQ:SPCX) to provide complete phone coverage in America." The FCC said service would reach "approximately 100% of the U.S. population."
The FCC will take public comments and opposition in December. Verizon, AT&T and T-Mobile, which reportedly rejected Musk's earlier requests to use their networks, have warned the agency about the consequences of a wider spectrum buildout. SpaceX previously spent $17 billion on spectrum from EchoStar, a deal the FCC approved in May.
A T-Mobile spokesperson said: "We welcome competition because it pushes us to be better and creates more value for customers. Spectrum and towers alone don't make a network."
