Tesla and SpaceX explore merger as Elon Musk gives backing

Tesla and SpaceX explore merger as Elon Musk gives backing Billionaire, on SpaceX earnings call, says ‘special committees’ exploring idea but no agreement reached yet

As SpaceX released its second-ever public earnings report on Tuesday, Elon Musk declared his support for combining the aerospace and AI company with his electric vehicle company, Tesla. He said both companies had created special committees to explore a potential merger, but have not reached any agreement on terms of a transaction.

“Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders and these special committees are, uh, consist of independent directors,” Musk said on the call. “Because I’m a conflicted party, I can’t actually be in the discussions of the special committees.”

Musk also expressed his backing for the move, while cautioning about the hurdles involved achieve it. He stated that it would require the approval of 50% of all Tesla shareholders.

“I think some people out there assume that a SpaceX and Tesla merger is a certainty and I think that would be overstating it,” Musk said, adding it would require shareholder approvals and special committees at both firms. “I do think there’s a lot of merit to combining the companies.”

The company revealed a far better financial quarter than Wall Street projected. SpaceX company, which encompasses rockets, artificial intelligence and satellite communications, reported a 161% growth in revenue year over year, driven by its Starlink and AI segments.

The company declared $14.58bn in revenue against analysts’ projected $12.72bn. SpaceX reported earnings per share of 35 cents and a net income of $4.4bn. The company’s stock, which started the day down about 8% for the year, shot up 2% in after hours trading immediately after the results.

Musk appeared alongside SpaceX’s president, Gwynne Shotwell, and CFO, Bret Johnsen, at his Starlink factory in Texas to deliver the earnings report, touting the company’s growth and plans for future rocket developments. Musk also highlighted its artificial intelligence segment, which the company refers to as Super Intelligence, that drew $7.6bn in revenue and now outperforms its Connectivity business, which provides internet services.

Musk’s company once again found itself in the spotlight in recent weeks as investors have speculated about the potential merger with Tesla, the second-most valuable part of the tech mogul’s empire. Musk has also been at the center of geopolitical tensions after Volodymyr Zelenskyy, Ukraine’s president, last week accused SpaceX of restricting access to its military-grade Starlink internet service.

The disruption in service to Starshield allegedly led to several failed Ukrainian combat missions and left the country more vulnerable to Russian drone attacks, as well as highlighted how global internet infrastructure has come to rely on Musk’s products . Musk denied responsibility for the disruption, stating that Starshield was controlled by the US government, not SpaceX. The White House has likewise denied hobbling Starshield.