Street View: Wall Street eyes merger upside as SpaceX's AI-fueled growth stuns

Tesla

Yesterday 09:21

** SpaceX SPCX.O posted a third-quarter profit that crushed estimates as revenue more than doubled on strong AI-driven growth, while CEO Elon Musk backed a potential merger with Tesla TSLA.O, calling it "a good idea"
** SPCX and TSLA shares up 9.2% and ~2%, respectively, in premarket trading
     
MERGER MATH MEETS AN AI MOONSHOT
** J.P. Morgan says a likely merger structure would be a SpaceX-led all-stock deal, with a typical 30%-35% premium to TSLA's current valuation, resulting in a merger of equals and helping Elon Musk retain majority voting control of the combined company 
** RBC ("outperform," PT: $225) says a SpaceX-Tesla combination could face valuation and governance hurdles, as TSLA shareholders may demand a premium, but sees substantial strategic benefits from deeper integration, particularly in AI, computing and semiconductor development
** Morningstar ("fair value": $70) says a SpaceX-Tesla combination could simplify operations across shared initiatives and sees the probability of a deal rising over time, particularly if SpaceX maintains its premium valuation
** Bernstein ("outperform," PT: $248) says "the outlook is what matters," pointing to management's expectation of an annualized revenue run rate of at least $100 billion by YE and recurring revenue of $500 billion to $1 trillion by the end of 2027
     

 (Reporting by Rashika Singh in Bengaluru)
 ((rashika.singh@thomsonreuters.com))