“Down 3% and 9%, respectively”—Will Musk make a high-stakes move with a Tesla-SpaceX merger?

[Financial News] Shares of Tesla and SpaceX, both led by Elon Musk, fell in tandem as a review of a potential merger between the two was officially announced.
In New York trading on the 22nd (local time), Tesla shares plunged 3% to close at $378.58, while SpaceX shares plunged about 9.1% to $144.75. Concerns about growth prospects amid reduced AI investment weighed on Tesla, while controversy over conflicts of interest surrounding a merger with Tesla and the overhang of shares coming onto the market weighed on SpaceX.
Tesla lowered its capital expenditure forecast for this year from at least $25 billion to about $20 billion, a reduction of at least 20%. Third-quarter capital expenditure was $4.7 billion, well below the market’s forecast of $7.5 billion. As a result, free cash flow came in at a surplus of $1.53 billion, reversing market expectations of a deficit.
Investors, however, focused more on cuts to investment in AI and robotics than on the improvement in cash flow. They are concerned that progress on projects such as robotaxis, the Optimus humanoid robot and TeraFab, a semiconductor production project, could slow.
JPMorgan noted that while delayed investment helps reduce short-term cash outflows, it could signal that investment needed to realize long-term growth opportunities is being postponed.
SpaceX appears to have fallen more sharply amid uncertainty over the merger and concerns about an expanded supply of shares. The previous day, SpaceX shares surged 7.8% after Musk publicly backed the possibility of a merger with Tesla, but gave back those gains within a day.
Musk previously said on a conference call about SpaceX’s third-quarter results (July–September) that the boards of both companies had each formed a special committee to consider a possible merger. SpaceX merged with xAI, the developer of the generative AI chatbot Grok, in February. If Tesla were also to merge with SpaceX, Grok and X’s data, SpaceX’s satellite and space infrastructure, and Tesla’s self-driving and humanoid robot businesses could be brought together.
Concerns about conflicts of interest among shareholders arose after Musk, who holds significant stakes in both companies, backed the merger. The end of lockup periods for some SpaceX shares could also weigh on the stock, as it increases the likelihood that existing investors will sell.
The two companies have a combined enterprise value of about $3.5 trillion. If completed, the merger could be the largest corporate combination in history, but uncertainty over the merger terms and protection of shareholder interests is expected to weigh on share prices for the time being.
[email protected] Kim Hee-sun Reporter