Musk says SpaceX and Tesla have formed committees to discuss a possible merger
In short
Elon Musk, CEO of both companies, said on SpaceX's third-quarter earnings call that SpaceX and Tesla have formed special committees of independent directors to discuss a possible merger. He called a merger a "good idea" but said no agreement has been reached and shareholders would have to approve. SpaceX reported net income of $4.4 billion on revenue of $14.6 billion.
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Elon Musk said on SpaceX's third-quarter earnings call on Tuesday that SpaceX and Tesla have formed special committees to discuss a possible merger. Musk, who is CEO of both companies, said the committees were formed at the request of shareholders and consist of independent directors, though he did not name them. [ 2 , 8 , 24 ]
Musk said he is not a member of either committee and is not involved in the discussions because he is a conflicted party. "It's an odd kabuki dance where two groups of people are talking and I can't be in the conversation," he said. The committees have not reached agreement on terms, and he said there is no guarantee they will. Asked about the idea, he said that assuming a merger is certain "would be overstating it." [ 2 , 8 ]
Musk called a merger a "good idea" and said there is "a lot of merit to combining the companies". He added that "there's a lot to be gained" from cooperating on AI software, chip design and robotics. He said it was up to the special committees, with any proposal then put to shareholders. The Verge quoted him as saying Tesla would need a 50 percent vote of all shares, which he called "quite a high hurdle." CNN said Tesla shareholders have historically broadly fallen in line with Musk's wishes. [ 2 , 3 , 5 , 8 ]
SpaceX reported third-quarter revenue of $14.6 billion, up 161% from a year earlier, and net income of $4.4 billion, according to CNN and CNBC. CNBC said it had a net loss of $1.05 billion in the same period a year earlier. CNN said analysts surveyed by FactSet had expected net income of $1.57 billion and revenue of $12.9 billion. CNBC cited LSEG consensus revenue of $12.72 billion, and Bloomberg cited an average net income estimate of $1.88 billion. [ 5 , 13 , 16 ]
SpaceX shares rose after the report. CNN said they were up more than 8% on Wednesday morning, CNBC said up 10% in premarket trading, and CBS News said up 9.9% to $162.41 in morning trading. CBS News said Tesla shares rose 3.8% to $387.72. CBS News quoted Dan Ives of Yorkville Ives & Co. as saying a merger would be valued close to $5 trillion, while The Verge put it at upwards of $3.6 trillion. Axios quoted analyst Gene Munster as seeing a 95% chance of a deal within two years. CNBC said Tesla was due to report earnings after the closing bell on Wednesday. [ 2 , 3 , 5 , 16 , 24 ]
Why it matters
A SpaceX-Tesla combination would join two of Musk's companies, and outlets cite valuations from upwards of $3.6 trillion to close to $5 trillion. Shares of both companies rose after the call, while Musk and outlets said a deal is not certain.
Key facts
- Musk said SpaceX and Tesla have formed special committees, made up of independent directors, to discuss a possible merger. [ 2 , 3 , 8 , 24 ]
- Musk said he is not a member of either committee or involved in the discussions because he is a conflicted party. [ 2 , 8 , 28 ]
- Musk called a merger a "good idea" and said there is "a lot of merit" in combining the companies. [ 2 , 3 , 5 , 8 , 25 ]
- SpaceX reported third-quarter revenue of $14.6 billion, up 161% from a year earlier, and net income of $4.4 billion. [ 5 , 16 ]
- CBS News reported SpaceX shares up 9.9% and Tesla shares up 3.8% in morning trading. [ 24 ]
- Tesla was due to report third-quarter earnings after the closing bell on Wednesday. [ 16 ]
Confirmed by several sources
- SpaceX and Tesla have formed special committees of independent directors to discuss a possible merger, Musk said on SpaceX's earnings call. [ 2 , 3 , 8 , 24 , 25 ]
- Musk said he cannot take part in the committee discussions because he is a conflicted party. [ 2 , 3 , 5 , 8 ]
- Musk said a merger is not certain and would need shareholder approval. [ 2 , 3 , 5 , 8 ]
- SpaceX reported third-quarter net income of $4.4 billion. [ 5 , 13 , 16 ]
- SpaceX shares rose after the earnings report and Musk's comments. [ 5 , 16 , 24 ]
Still unclear
- Whether the two companies will agree on a deal and on its terms. Musk said the committees have not reached agreement on terms and there is no guarantee they will.
- Who sits on the special committees. Musk did not name the independent directors, according to The Verge and NBC News.
- How large a combined company would be. The Verge cites upwards of $3.6 trillion, the New York Times well over $3 trillion, and CBS News quotes an analyst saying close to $5 trillion.
- When SpaceX went public. CNN refers to a July IPO, while CNBC says June.
- How far SpaceX results beat expectations. CNN cites FactSet estimates of $1.57 billion net income and $12.9 billion revenue, CNBC cites LSEG revenue consensus of $12.72 billion, and Bloomberg cites an average net income estimate of $1.88 billion.
What local media are saying
Timeline, local time
- AP published a report that SpaceX posted a profit and Musk hinted at a possible merger with Tesla. [ 1 ]
- The Verge reported that Tesla and SpaceX have formed special committees to discuss a merger. [ 2 ]
- Axios reported Musk's comments that a merger "would be a good idea" but is not certain. [ 3 ]
- NBC News and TechCrunch published reports on the special committees. [ 8 , 9 ]
- CNBC reported SpaceX shares up 10% in premarket trading on Wednesday. [ 16 ]