Source: Fortune
Summary
Elon Musk may use SpaceX’s high valuation to merge with Tesla, creating a $3.4 trillion entity. A Fortune analysis suggests that the combined company could potentially lose money, with Tesla’s trailing GAAP earnings collapsing from $15 billion in 2023 to $3.9 billion today. The deal would involve SpaceX issuing new shares equivalent to 94% of its current count to absorb Tesla, doubling its share base to 8 billion.
Our Reading
The numbers tell one story.
Elon Musk may be using SpaceX’s valuation to bail out Tesla. The combined entity would be nearly three times the size of the largest merger ever completed. SpaceX’s inflated shares would be used as currency to pay for Tesla, which has seen its earnings collapse. The deal raises questions about creating a larger overvaluation problem.
The strategy enters a familiar phase: using one company’s valuation to rescue another.
Author: Evan Null
