Musk Says Tesla and SpaceX Boards Form Special Committees to Weigh Merger, Steps Back Over Conflict

Elon Musk told investors on SpaceX's third-quarter earnings call that the boards of SpaceX and Tesla have each formed special committees to explore a potential merger of the two companies, a preliminary step that Bloomberg Law and Seeking Alpha both described as a move toward what could become the largest corporate merger ever recorded. Musk, who serves as chief executive of both companies, said he is not participating in the committee discussions because he is a conflicted party, and that the committees have not yet agreed on terms, according to Bloomberg Law.

What Musk said on the call

"I do think there's a lot of merit to combining the companies," Musk said on SpaceX's earnings webcast, according to Bloomberg Law, adding that "there's a lot to be gained from cooperating on developing superintelligence software." The BBC separately reported that Musk called a merger a "good idea." At the same time, Musk pushed back on the idea that a deal is inevitable. "Some people out there assume that a SpaceX and Tesla merger is a certainty," he said, according to Bloomberg Law. "I think that would be overstating it." He said any combination would require shareholder support, and that Tesla would need approval from 50% of all shareholders rather than simply a majority of those voting, Bloomberg Law reported. As a matter of interpretation of that reported threshold, requiring half of all shares outstanding is a higher hurdle than a majority of shares actually voted, because shares that go unvoted do not count toward approval.

Musk's comments did not touch on who would sit on the special committees, whether financial or legal advisers have been retained, what exchange ratio or deal structure might be contemplated, or which company would be the formal acquirer. Those specifics were not addressed in the earnings-call remarks reported by Bloomberg Law, CNBC, Seeking Alpha or the BBC.

A scale mismatch between the two companies

Bloomberg Law reported that SpaceX, formally Space Exploration Technologies Corp., carries a market value of about $2 trillion, versus nearly $1.5 trillion for Tesla. By our calculation based on those figures, SpaceX's valuation is roughly $0.5 trillion, or about 33%, higher than Tesla's. Any merger would need to resolve that gap through whatever exchange structure the special committees eventually negotiate, though no such framework has been disclosed.

SpaceX's quarter gives context to the timing

The merger disclosure came as SpaceX reported third-quarter revenue of $14.58 billion against a $12.72 billion consensus compiled by LSEG, and adjusted earnings of 45 cents a share versus an expected 13 cents, per CNBC. By our calculation, revenue beat expectations by $1.86 billion, or about 14.6%, while adjusted EPS beat the estimate by 32 cents, a gain of roughly 246%. SpaceX posted operating income of $2.8 billion and net income of $4.4 billion, reversing a $1.05 billion net loss a year earlier, CNBC reported.

The company's AI business, now branded "Super Intelligence" after SpaceX's acquisition of Musk's xAI lab earlier this year, became its largest segment, with revenue jumping roughly ninefold to $7.56 billion from $813 million a year earlier, according to CNBC. Starlink subscribers grew to 13.6 million from 12 million in the prior period, an increase of about 13.3% by our calculation, and CNBC noted that almost all of SpaceX's profit still comes from Starlink. CFO Bret Johnsen guided first-quarter 2027 revenue to $33 billion to $37 billion, well above the $22.2 billion LSEG consensus, citing "increased visibility into our compute contract pipeline over the next six months," CNBC reported. Musk separately told the call that annual recurring revenue by the end of next year could reach $500 billion to $1 trillion across infrastructure, cloud deals and paying Grok users, against analyst projections of about $110 billion in full-year 2027 revenue, per LSEG data cited by CNBC.

How shares moved

SpaceX shares rose 4.6% in postmarket trading after the results and merger comments, Bloomberg Law reported, while CNBC put the postmarket gain at about 5%. Tesla shares climbed 1.2% in the same session, according to Bloomberg Law. By our calculation, SpaceX's reported postmarket gain was roughly 3.4 percentage points, or about 283%, larger than Tesla's. CNBC noted that Tesla was scheduled to report its own third-quarter results after the close the following day, meaning investors had limited time to weigh the merger disclosure before Tesla's own numbers landed.

Existing ties and prior merger talk

Bloomberg Law reported that SpaceX and Tesla already have extensive commercial links, including more than $100 million in Tesla Cybertruck purchases by SpaceX and xAI's role as a major customer of Tesla's utility-scale batteries, alongside overlapping investor bases and some shared personnel. Bloomberg Law also noted that Bloomberg News reported in January that SpaceX had weighed a Tesla merger before ultimately deciding to acquire xAI instead, and that a combination has been widely expected since SpaceX's record initial public offering this year gave it acquisition currency and what Bloomberg Law characterized as an implicit shareholder green light to pursue Tesla.

Bottom Line

Musk has confirmed that formal board-level exploration of a Tesla-SpaceX merger is underway, with special committees formed at each company and Musk himself stepping back given his dual role as chief executive of both. He has been explicit that no terms have been reached and that shareholder approval, under a threshold he described as requiring 50% of all Tesla shareholders rather than a simple voted majority, remains a precondition. What is not yet known from his comments is who sits on the committees, what advisers have been engaged, or what structure any deal might take, leaving the size gap between SpaceX's roughly $2 trillion valuation and Tesla's nearly $1.5 trillion valuation as an open question for negotiators.