Elon Musk stated that merging his two companies, SpaceX and Tesla, could be a 'good idea,' and announced that special committees have been formed to discuss such a merger. This statement led to an 8% rise in SpaceX shares during extended trading.
On Tuesday, SpaceX reported profits for the first time as a public company. Musk forecasts that by the end of 2027, the company's annual recurring revenue will reach between $500 billion and $1 trillion, driven by growing demand for its data center capacity amid the AI boom.
Previously, Musk had repeatedly hinted to shareholders about the possibility of merging SpaceX and Tesla, citing the increasing overlap in their fields of operation. Recently, speculation has intensified that the aerospace company might acquire the electric vehicle manufacturer. Barclays suggested last week that the deal could be announced before Tesla's annual meeting in December.
Statement on Merger Possibility
"I think it would be a good idea, but it really depends on the special committees of both companies," said Musk, making the first official confirmation that the companies are conducting formal negotiations. He noted to investors during a conference call that, as a stakeholder, he cannot participate in the discussions of the special committees. These committees consist of independent directors.
He added that the committees were formed at the request of shareholders, who must ultimately approve any deal. Musk emphasized that there is significant value in combining the companies because they operate in the field of superintelligence singularity, and collaboration could bring much benefit to superintelligence software development, chip design, Terafab, robotics, mass launches using the Starmind constellation, and connectivity.
Musk also reported that the joint venture for chip production, Terafab, should release its first test chip around May or June of next year, with production volume planned by the third quarter of 2028.
Premature Speculation Not Advised
He warned against speculating prematurely about the merger, as the committees have not yet agreed on terms and may never do so. Tesla shares rose by 1.8% during extended trading.
Musk, who is the world's richest person, owns nearly one-fifth of Tesla and slightly less than half of SpaceX. Analysts believe that a merger would give him control over the combined company. An acquaintance with the situation told Reuters that negotiations began in recent weeks and could lead to SpaceX acquiring Tesla, but he declined to give his name as he was not authorized to speak to the media. According to this source, Tesla is working with an investment bank to advise on these discussions.
SpaceX's revenue increased by 161%, reaching $14.58 billion over the three months ending September 30. AI revenue grew almost tenfold to $7.56 billion, mainly from renting out data center capacity to developers such as Anthropic, Google from Alphabet, and Reflection AI, rather than from its own models.
The third quarter was the clearest evidence that SpaceX's large investments in AI are beginning to yield returns, despite huge expenditures on computing infrastructure. Capital expenditures nearly tripled to $19.6 billion, and CFO Bret Johnsen stated that the company expects to receive $35 to $40 billion in the fourth quarter. It was also reported that SpaceX plans to allocate $40 billion to purchase Nvidia chips.
This shift transforms the company, whose financial engine was long powered by the Starlink business, and whose long-term ambitions still depend on the regular operation of Starship rockets. Currently, its core business resembles a cloud provider more than an AI laboratory.