Kalshi Traders See 49% Chance SpaceX and Tesla Will Merge Within a Year

The SpaceX IPO is now behind us, but we may not be done with big news from Elon Musk. Traders on prediction market Kalshi are pricing a 49% chance that Space Exploration Technologies (NASDAQ:SPCX) will merge with electric vehicle maker Tesla (NASDAQ:TSLA) before May 1, 2027.

As both companies are headed by Musk and rely heavily on artificial intelligence, there’s long been speculation that the two companies could eventually merge. CNBC reported on May 27 that Tesla and SpaceX were already considering a merger, and Musk himself has reportedly raised the issue.

Speculation heated up even more as SpaceX had its record-breaking IPO on June 12, with Wedbush analyst Dan Ives estimating there was an 80% chance the companies would merge, and SpaceX President Gwynne Shotwell acknowledging that a merger “might make Elon’s life a little easier, actually.”

“There’s no question that there’s synergies between Tesla and SpaceX in our futures, definitely,” Shotwell told CNBC. “There’s a convergence of a kind of what we’re all trying to accomplish in the future.”

There are natural elements that make SpaceX and Tesla a potential match. In addition to both being Musk's brainchildren, Tesla and SpaceX rely heavily on artificial intelligence. A merger enables them to more easily benefit from training models, share talent, and consolidate resources. Ross Gerber, a longtime Tesla investor, said a merger of Tesla and SpaceX would fulfill a Musk ambition to create an AI-driven conglomerate.

So, it seems plausible that such a merger will happen one day. But would it happen within a year, as Kalshi traders are betting? Here are three issues that would factor into such a deal.

Tesla and SpaceX have vastly different markets -- and one mission in common

Tesla is an EV company -- and the electric vehicle industry is highly competitive. That means investors are watching Tesla’s production and delivery numbers every month and pushing for Tesla to maintain a profit margin that keeps the stock appealing. Last year, those margins took a significant hit as Tesla discounted its vehicles amid rising competition and the expiration of a federal tax credit. Tesla stock struggled throughout most of 2025 and underperformed the S&P 500.

SpaceX, meanwhile, is a government contractor with its rocket-launching business, which to date has carried out more than 660 missions, including trips to the International Space Station. Then there’s Starlink, which is SpaceX’s most profitable business to date. Starlink provides internet and mobile connectivity to hard-to-reach and rural areas via a network of satellites. Neither faces the competitive pressure that Tesla faces in its EV business.

But SpaceX is getting most of its attention for xAI -- a standalone company also owned by Musk that was folded into SpaceX earlier this year. xAI operates Grok, the large language model, and X, the social media platform formerly known as Twitter. Musk uses xAI to integrate AI throughout his companies, including Tesla.

It’s the latter business that works most smoothly in a Tesla merger.

Valuation could be difficult

At this writing, SpaceX is actually the more valuable company, with a market cap of around $2.2 trillion. Tesla’s market cap is $1.5 trillion -- ranking them both in the top echelon of publicly traded companies.

Image source: The Motley Fool.

But Tesla turns a profit and SpaceX does not. In 2025, Tesla reported revenues of $94.82 billion and net income of $5.8 billion. And those profits continued into the first quarter, when Tesla recorded $22.38 billion in revenue and $1.45 billion in net income.

SpaceX had $18.7 billion in revenue in 2025, which was up from $14 billion in 2024. But it also recorded a net loss of $4.9 billion for the year. Its Starlink segment was successful, bringing in $11.4 billion in revenue and $4.4 billion in operating income. But the rocket-launching business lost $657 million for the year, and xAI lost $6.4 billion.

On top of that, SpaceX will continue to spend a massive amount of money to build out its AI ambitions. Goldman Sachs projects that SpaceX will have a negative free cash flow of $105 billion in 2029.

So, how would you value SpaceX stock in a merger? Shares are currently trading at a trailing price-to-sales ratio of more than 110, compared to Tesla’s 14.6.

Musk’s compensation would need to be addressed

At Tesla, Musk famously received a huge compensation package at the last shareholder meeting. It could be worth as much as $1 trillion should Musk reach valuation and operational targets, such as 20 million vehicle deliveries, 10 million active full self-driving subscriptions, 1 million Optimus robots, and 1 million commercially deployed robotaxis.

Musk has an even greater say in SpaceX, where he owns 42% of the equity and about 82% of the voting power. And the successful SpaceX IPO made Musk the world’s first trillionaire.

A merger may impact Musk’s compensation at Tesla, as well as the rights of Tesla shareholders. Like the other issues, this isn’t an insurmountable obstacle, but it would likely need to be addressed before a merger happens. And it explains why Kalshi traders are likely seeing the merger before May 1, 2027, as more of a coin flip than an inevitability.

Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and Tesla. The Motley Fool has a disclosure policy.