Analysts cite political and valuation risks in a possible Tesla-SpaceX deal

Tesla shares move lower

Yahoo Finance reports that Tesla shares slipped almost 2% overnight before Thursday. The stock also fell 3% on Wednesday to $385.19, which left it down nearly 4% for the week. The article says investors were reacting to concerns about politics and about the value of any possible SpaceX deal.

Political concerns around a possible merger

Mark Tepper, chief executive of Strategic Wealth Partners, questioned whether a Tesla-SpaceX merger would happen. He said increasing political pressure on Elon Musk could lead to stricter regulation for both companies. Tepper said on X, “I don’t see the SpaceX merger happening.” Yahoo Finance says his comments came after Democrats won control of both chambers of Congress and the Texas governor’s race. The article notes that Texas is home to major Tesla and SpaceX operations, as well as their planned Terafab chipmaking project.

Scrutiny could slow any transaction

Kathleen Brooks, research director at XTB, also said a deal could face delays if Congress increases its review. According to Brooks, lawmakers could not prevent a merger outright, but they could make the process slower by demanding more scrutiny. Yahoo Finance reports that Tesla and SpaceX have each formed special committees to examine a possible merger.

Premium risk in an all-stock deal

Gary Black, managing partner of The Future Fund, warned that a stock-for-stock SpaceX-Tesla transaction might not hold the value that supporters expect. He pointed to Marvell Technology’s deal for Lumentum Holdings as an example, saying that a premium can disappear if the buyer’s stock falls. Black said on X that “a +24% premium can quickly go negative” when the acquiring company is sold off. Yahoo Finance says he cited declines of 27% in Lumentum and 31% in Marvell from their pre-announcement levels, and noted earlier this week that Lumentum fell 15% to $750 as Marvell dropped 26% after deal rumors.

ARK buys SpaceX shares anyway

Despite the caution around a possible merger, Cathie Wood’s ARK Investment Management bought 348,406 SpaceX shares through three exchange-traded funds. Yahoo Finance says the purchase was worth about $47.4 million. The article also says Jeff Lutz defended Musk’s Texas projects and estimated that Texas would account for 7% to 12% of SpaceX’s targeted 13-gigawatt compute capacity by the end of 2027.