Will Tesla Be Acquired by SpaceX? And Does That Make Tesla Stock a Buy?

Now that SpaceX (NASDAQ: SPCX) has successfully gone public, there is speculation that the company could acquire fellow Elon Musk-back company Tesla (NASDAQ: TSLA). Prediction market Kalshi already places the odds of it happening before May 1, 2027, at 54%, while SpaceX President Gwynn Shotwell has also floated the idea, saying it "might make Elon's life a little easier."

The two companies already share resources and personnel and buy products from each other. This includes SpaceX buying nearly $700 million in Tesla Megapack energy storage systems in 2024 and 2025 and $131 million in Cybertrucks. They also have closely aligned boards, and Musk holds 85% of SpaceX's voting power. Musk is also set to develop a giant chip manufacturing facility in conjunction with Intel to produce AI chips for both Tesla and SpaceX.

Image source: The Motley Fool.

From a synergy perspective, a deal does make sense. SpaceX's biggest ambition is to develop solar-powered data centers in space. Tesla has a large solar business that could provide and develop the solar panels and battery storage packs for this huge undertaking. It is also trying to become a robotics leader with Optimus. Having robots assemble orbital data centers and assist with maintenance could help orbital data centers overcome these challenges.

It would also be pretty easy to market a combined SpaceX-Tesla as a company embarking on futuristic opportunities. The valuations of both are currently based on potential future endeavors, and it is easier to make the case with one company taking various shots on goal than with two separate trillion-dollar companies. It would also take some focus from Tesla's meandering core electric vehicles (EV) business.

A history of related mergers

Musk also has no issues with making deals that benefit himself and his family. This was evident when he helped rescue a struggling, highly indebted SolarCity in 2016. The company was founded by his brother, and Elon owned 22.5% of the stock. However, after he removed himself from the transaction process, he was able to beat back a shareholder lawsuit accusing him of self-dealing. Musk also had SpaceX acquire his huge money-losing xAI business before its IPO.

A SpaceX acquisition of Tesla at a premium would be another huge windfall for Musk, who owns about 20% of the company. He would have to recuse himself from the process, but his buddy-buddy board wouldn't stop it, and there are enough synergies to justify the combination. While there is no guarantee a deal will take place, I think the odds are good.

Is Tesla stock a buy?

That's a tough question. Generally, I don't like buying stocks based solely on their acquisition potential, because that can be a slippery slope. Without the potential of an acquisition, I view Tesla as a highly speculative stock. Its core EV business has struggled, and its prospects there no longer justify its high valuation.

The company's valuation is now more tied to its robotaxi and Optimus robot ambitions. While the company is operating robotaxis in Austin, Texas, the countrywide rollout Musk envisioned has not gone as planned, and its technology continues to have some unresolved issues. Meanwhile, rival Waymo has quickly expanded into new cities across the U.S. If Musk's cheaper vision-only approach works, it will have a big cost advantage, but right now it's losing out. Musk is even more excited about his Optimus robots, but this is also very much in its experimental stages. There is not much to indicate how well the project will pan out at this point.

Still, given how closely Tesla and SpaceX are tied together, you can't ignore the strong possibility that they will merge. I think that is a reason to own a small position in the stock.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Tesla. The Motley Fool has a disclosure policy.