Musk confirms SpaceX-Tesla merger has "a lot of merit." Here's why.
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Elon Musk on Tuesday said SpaceX and Tesla are exploring a merger, a business combination that one Wall Street analyst said could be worth nearly $5 trillion, which would make it the largest deal in corporate history.
Key facts
Tesla's stock price rose $14.01, or 3.8%, to $387.72, while SpaceX shares jumped $14.62, or 9.9%, to $162.41 in morning trading
SpaceX is currently valued at $1.98 trillion, while Tesla's market capitalization stands at about $1.5 trillion
For the merger to get passed by shareholders, it would have to be a higher price for Tesla, likely in the $500/$550 per share range in our view," he said
That would make the combined company one of the most valuable in the world, rivaling that of the most highly valued businesses like chipmaker Nvidia, worth $5.2 trillion, or Apple, valued at $4.95
Summary
"Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders, and these special committees consist of independent directors," Musk said during SpaceX's earnings call with investors, adding that he sees "a lot of merit to combining the companies. Tesla's stock price rose $14.01, or 3.8%, to $387.72, while SpaceX shares jumped $14.62, or 9.9%, to $162.41 in morning trading. The merger would likely be valued at close to $5 trillion, Dan Ives, partner and senior managing director at investment firm Yorkville Ives & Co., told CBS News. SpaceX is currently valued at $1.98 trillion, while Tesla's market capitalization stands at about $1.5 trillion.