ARK Investment Management expects Tesla (TSLA) and SpaceX (SPCX) to announce a merger before the end of the year, saying that a combination would leave shareholders of both the Elon Musk-led companies better off.
TSLA stock rose 1% on Monday, extending gains for a second straight session, while SPCX jumped 4% for its third consecutive advance and closed above its $135 initial public offering price.
Speaking on ARK’s “The Brainstorm,” Chief futurist Brett Winton predicted that a merger could be announced, but likely not completed, before the end of 2026. “Announced, yes. It won’t go through, but I think it gets announced before the end of the year,” Winton said. “I think that’s quite likely.”
Nicholas Grous, ARK’s director of research for consumer internet and fintech, agreed that “the announcement is coming before end of year.” Still, Winton said the financial logic favors bringing the two companies together. “If you take from a SpaceX shareholder perspective and from a Tesla shareholder perspective, they are both net better off if these entities are combined,” he said. He added that the companies would need to find “a working mechanism” that delivers fair value to both shareholder groups.
The deal’s structure could depend on the premium SpaceX must offer to secure Tesla shareholder approval. “There’s a lot of sensitivity on whether or not SpaceX has to pay a premium for Tesla shares and what premium it would have to pay in order to win the shareholder vote,” Winton said.
Tesla’s China business presents the biggest geopolitical challenge as SpaceX is a major U.S. defense contractor. “I could understand why Tesla China poses a somewhat uncomfortable puzzle piece for any SpaceX-Tesla merger since SpaceX has a lot of national security-related business,” Winton said. However, he believes Tesla could ring-fence its Chinese assets.
“I don’t see it as a stumbling block,” Winton said, later calling the issue a “small-ish wrinkle.” Musk recently rejected reports that Tesla could sell or spin off its China operations to facilitate a merger, calling them “fake news.”
China generates about 20% of Tesla’s annual sales, while its Shanghai factory remains a major production and export hub. The plant shipped 93,579 vehicles in July, up 38% year over year. Untangling shared software, AI, intellectual property and data systems could prove harder than separating physical manufacturing.
ARK believes Tesla’s future value lies in robotaxis, not its Shanghai factory. “Robotaxi is where most of the future economics of the business are going to lie,” Winton said. Sam Korus called the transition “Tesla 3.0,” with robotaxis representing “Tesla 3.5.”
Tesla and SpaceX are deepening their ties through AI, chips and infrastructure. SpaceX spent $15.8 billion on AI during the quarter, while xAI represented nearly 83% of its first-half capital expenditure. As Grok struggles against ChatGPT and Claude, xAI is pivoting toward renting computing capacity. That helped it swing from a $609 million adjusted loss to a $1.1 billion gain, supported by contracts with Anthropic and Google.
SpaceX CFO Bret Johnsen said its AI compute investments offer “less than a one-year payback,” although Morningstar expects the business to take about a decade to become profitable.
On Stocktwits, retail sentiment was ‘bearish’ for TSLA amid ‘low’ message volume, while SPCX sentiment was ‘bullish’ amid ‘extremely high’ chatter.
One user said, “$TSLA I think Elon pushes a merger with $SPCX before EOY. I’m truly unsure though if any news of this occurs, what the stock price would be like for these two with that news. I almost see both spike hard but then fall?”
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Another user said, “I think SpaceX has to get back to 200 then he’ll [CEO Elon Musk] value Tesla at $475 and merge”
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Tesla is the worst-performing “Magnificent Seven” stock this year, down about 26%, while SPCX has fallen 14% over the past three months.
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