SpaceX Stock on Edge as Polymarket Traders Bet on a Tesla Merger

SpaceX stock entered October 20 under pressure as speculation surrounding a potential Tesla merger intensified. Prediction-market traders assigned a 66% probability to an official merger announcement by December 2027.

The speculation coincided with SpaceX’s third-quarter earnings announcement, scheduled for Tuesday. Tesla will report its financial results on October 21.

Investors are assessing whether combining Elon Musk’s companies could strengthen their artificial intelligence operations. However, neither company has confirmed a definitive merger agreement.

Odds of SpaceX and Tesla Merger are Rising

Traders on Polymarket are increasingly betting that Elon Musk will plot a merger between SpaceX and Tesla. Such a move would be the biggest deal on record, since Tesla has a market capitalization of $1.48 trillion, while SpaceX is valued at $1.93 trillion.

The deal would create a conglomerate with various business interests, including electric vehicles, satellite communications, artificial intelligence (AI), robotics, and satellite launches.

However, the deal would not be an easy one to close. For one, China and the US would be involved because of SpaceX’s work for the US government. as a result, there are rumors that Musk may consider selling or spinning off Tesla China.

The deal would also have other challenges since the potential for synergies is relatively slim. Besides, the two companies operate in vast and diverse industries. Also, it would happen at a time when many conglomerates are simplifying their operations and launching independent companies.

A good example of this is General Electric (GE). After years of struggling, the management decided to separate the business into three: GE Healthcare, GE Aerospace and GE Vernova. Today, each of these businesses has done well, with the combined market capitalization being much higher than before the spinoff.

Tesla and SpaceX already collaborate on some areas. The most notable is the Terafab project, which is costing billions of dollars. The two companies aim to become large players in the booming semiconductor industry.

Earlier this year, Musk merged SpaceX with xAI, the company that owned X (Twitter) and Grok, the ChatGPT rival.

SpaceX Stock to React to its Earnings Report

In addition to the potential SpaceX and Tesla merger, the stock will also react to SpaceX’s second earnings report as a publicly traded company. These results will provide hints on its revenue growth and capital expenditure plans.

The last earnings report showed that SpaceX’s revenue jumped sharply in Q2, driven by its Starlink and AI businesses. Its revenue soared by 92% in the quarter, with Starlink having over 12 million subscribers.

The average estimate among analysts is that its revenue growth continued growing in Q2. This time, the growth will be driven by its AI business, which has seen large orders from companies like Google and Anthropic.

The company will use the earnings report to shed color on its fundraising efforts. Recently, it was reported that SpaceX was seeking to raise another $40 billion to acquire Nvidia chips for its data center industry. Before that, it raised funds by selling bonds to fund its Cursor buyout.

SpaceX will also talk about its entry into telecommunications. It recently spent $8 billion acquiring spectrum that will see it become a closer competitor to companies like AT&T and Verizon. Musk will be tasked with explaining how the company intends to expand to this segment.

After the SpaceX earnings, Tesla will also release its results a day later. Analysts expect these numbers to show that its revenue was largely flat year-over-year. Traders will focus on its free cash flow as it continues investing in AI.

This article is for informational purposes only and does not constitute financial or investment advice. Equity and prediction markets involve substantial uncertainty and potential financial losses. Readers should conduct independent research and consult a qualified financial adviser before making investment decisions.