SpaceX and Tesla Are Weighing a Merger. What Musk Said, What's Unknown, and What to Watch.

The short answer

On SpaceX's October 20, 2026 earnings call, Elon Musk said the boards of SpaceX and Tesla have each formed special committees of independent directors to study a possible merger. No terms have been agreed, Musk is recused because of his conflict of interest, and he said calling a deal a certainty would be "overstating it." A Tesla vote would need a majority of all Tesla shares, which he called "quite a high hurdle."

By Barclays' figures, SpaceX is worth about $2.1 trillion and Tesla about $1.5 trillion, so a combination would be roughly $3.6 trillion. SpaceX also reported $14.6 billion of Q3 revenue, up 161%, and its first quarterly profit since its IPO, so the stock reaction mixes earnings news with merger talk.

Hey everyone,

On SpaceX's third-quarter earnings call on Tuesday, October 20, Elon Musk confirmed that the boards of SpaceX and Tesla have each formed a special committee to study the idea of merging the two companies. That's the whole news so far: a possibility under review, not a deal. But with SpaceX valued around $2.1 trillion and Tesla around $1.5 trillion, even the possibility moves markets.

This is a developing story. Tesla reports its own quarterly results after the market closes today, October 21, and nothing here reflects that. We'll lay out what's been said, what hasn't, how the stocks reacted, and what to watch, using reporting from NBC News, Reuters, Euronews, Al Jazeera, and Yahoo Finance. Figures differ slightly between outlets, and we flag where.

What did Musk say about a SpaceX and Tesla merger?

Asked about it on the call, Musk endorsed the idea while stressing that nothing is settled. He called a combination "a good idea," and said "I do think there's a lot of merit to combining the companies," pointing to overlap in AI software, chip design, robotics, and space-based computing. On the process, he said:

"I think both SpaceX and Tesla have formed special committees to discuss this idea."
Elon Musk, SpaceX Q3 earnings call, October 20, 2026, as reported by Yahoo Finance

He also pushed back on the expectation that it's a done deal:

"Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it."
Elon Musk, as reported by Al Jazeera

Reuters-based coverage says the committees were formed at shareholders' request and haven't agreed on terms, and that there's no guarantee they will. Musk described answering questions on the topic as "tap dancing through a minefield," because of his position, which is explained next.

What are special committees, and why is Musk staying out?

Musk is the controlling shareholder of SpaceX and a large shareholder and leader at Tesla. When one person sits on both sides of a deal, standard practice is to have each company's independent directors, the ones with no conflict, evaluate it. That's what the special committees are. Musk said:

"Because I'm a conflicted party, I can't actually be in the discussions of the special committees."
Elon Musk, as reported by Yahoo Finance

The committees would negotiate terms, likely with outside advisers, and any agreement would have to go to shareholders. On the Tesla side, Musk said approval would need a majority of all Tesla shares, not just those that vote, which he called "quite a high hurdle." Reuters-based reporting puts it the same way.

SpaceX voting power held by Musk

82%+

Musk's Tesla stake (approx.)

~20%

Barclays: Musk's vote in a combined company

~56%

Tesla vote needed

50% of all shares

The voting figures come from Euronews and from Barclays analyst Dan Levy, as relayed by Yahoo Finance. Levy estimates that if SpaceX bought Tesla at current values, Musk would hold about 37% of the combined company and about 56% of the vote. That's an analyst's illustration, not a proposed deal.

How big would a SpaceX-Tesla merger be?

Very big. By Barclays' figures, SpaceX is worth about $2.1 trillion and Tesla about $1.5 trillion, so a combined company would be worth roughly $3.6 trillion by our addition. Al Jazeera describes it as potentially the largest merger in history. Barclays expects SpaceX would be the buyer in an all-stock deal, with each Tesla share worth about 0.7 SpaceX shares before any premium.

Size of the deal compared with other recent mega-mergers ($ trillions)

Sources: Barclays via Yahoo Finance (Tesla about $1.5 trillion), Al Jazeera (SpaceX-xAI union valued at $1.25 trillion in February), and our earlier post on Paramount's roughly $111 billion Warner Bros. Discovery deal. No SpaceX-Tesla terms or price have been announced; the Tesla bar uses its market value as a rough stand-in.

For scale, the $111 billion Paramount-Warner Bros. deal we covered in an earlier post was the largest media acquisition on record. Tesla's market value alone is more than 13 times that.

There's also a trail leading here. Musk merged X with xAI in 2025, SpaceX acquired xAI in February 2026, and in January Tesla announced a roughly $2 billion investment in the AI startup that is now a SpaceX subsidiary. Bloomberg reported in January that SpaceX was considering a merger with Tesla as well.

What did SpaceX report, and how did the stocks react?

SpaceX's results were strong, which matters because it's hard to separate the earnings reaction from the merger reaction. For July through September, SpaceX reported:

Revenue: $14.6 billion, up 161%.
Net income: $4.4 billion, versus a $1.1 billion loss a year earlier. It was SpaceX's first quarterly profit since its June IPO. Al Jazeera notes that profit for the first nine months of the year was $413 million.
AI unit ("Super Intelligence"): $7.6 billion of revenue, more than nine times a year earlier, with an operating profit of $431 million. Cloud deals with Anthropic and Google drove the growth, and the unit overtook Starlink as the largest revenue source.
Starlink: revenue up 69% to $5.2 billion, with 13.6 million consumer subscribers, though average monthly revenue per consumer fell to $69 from $83.
Spending: $19.6 billion of capital spending in the quarter, $16.4 billion of it on AI, and about $48 billion over nine months.

SpaceX Q3 2026 revenue by source ($ billions)

Sources: Euronews and Reuters-based reporting via Yahoo Finance. "Everything else" is our arithmetic (total revenue minus the AI and Starlink figures), not a reported number.

On the stocks, reports vary by outlet and by the moment measured. Reuters-based coverage put SpaceX up nearly 5% in after-hours trading, while Al Jazeera reported more than 8%, and a quote shown on Yahoo Finance's page in premarket trading was up almost 12%. Tesla was up about 1.8% in after-hours trading, according to Al Jazeera. All of these are extended-hours prices, not closing prices, and the earnings beat is mixed in with the merger news, so no one can say how much of the move is due to each.

Why might a merger make sense?

Technology overlap. Musk cites AI software, chip design, robotics, and space-based computing. NBC News notes the companies overlap in semiconductor manufacturing.
The AI compute race. SpaceX's AI unit now generates more revenue than Starlink, and its capital spending is heavy. Musk said power, cooling, and electrical equipment are "somewhat of a limiting factor" for adding computing capacity, which links this story to the data center buildout we covered in our post on data centers and the economy. It also connects to Anthropic, a cloud customer of SpaceX's AI unit, as we noted in our look at its leaked prospectus.
Market expectations. Barclays' Levy wrote that a tie-up "has increasingly become the consensus expectation," and a UC Riverside M&A expert told Al Jazeera the deal has "sound logic."

What are the concerns?

Conflicts and control. One person on both sides of a deal is the classic governance problem. The special committees and the Tesla shareholder vote are the safeguards, and critics will watch how independent the process really is.
The price. Terms matter most to Tesla shareholders: how many SpaceX shares they'd receive, and whether they'd be paid a premium. SpaceX shares have been volatile, falling roughly 35% from their post-IPO peak before this week's pop, according to AP.
A new, heavy-spending business. SpaceX's first quarterly profit came alongside $19.6 billion of quarterly capital spending, and Starlink's revenue per consumer is falling. A merger would link Tesla's results to that spending cycle.
Complexity. Combining a carmaker, a satellite and launch company, and an AI business is a big integration challenge.
It may not happen. Musk himself said treating it as certain would overstate things.

What happens next?

If the committees agree on terms, the steps would typically be a public announcement, regulatory filings with the SEC, and shareholder votes at both companies. Barclays sees Tesla's annual meeting, which has to be held by December 6 under SEC rules, as a likely venue for a vote, and suggests the whole process could take six to 12 months. That timeline is an analyst's view and could change.

Near-term things to watch:

Tesla's earnings call tonight. It may bring more comments from management or Musk.
Any announcement from either committee, including who their advisers are.
SEC filings from both companies, which is where real terms and votes would appear. See our guide to IPOs for how to read company filings on EDGAR.
The exchange ratio, if one is proposed, since it determines what each side gets.

What does this mean for investors?

It's a possibility, not a deal. Prices that move on merger talk can move back if talks stall.
Separate the stories. SpaceX's results and the merger idea moved the stocks at the same time. Judge each on its own fundamentals.
Terms decide who wins. In a stock-for-stock deal, the exchange ratio matters more than the headline.
Concentration risk rises. If you own both stocks, or an index fund heavy in them, a merger would put more of your money behind one person's vision. Diversification is the main protection.
Be wary of valuation. Both companies carry high valuations, and our post on P/E ratios and pre-profit companies explains why those are tricky to judge.

Key takeaways

SpaceX and Tesla have formed special committees to study a merger, and Musk says he's recused because of his conflict.
No terms have been agreed, and Musk says calling it a certainty would be overstating it.
A deal would be enormous, with a combined value around $3.6 trillion by Barclays' figures.
Tesla shareholders face a high bar: a majority of all Tesla shares must approve.
Watch the filings and the terms, not the headlines or the day's stock move.

We'll update this as the story develops.

More soon,
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Frequently asked questions

Are SpaceX and Tesla merging?

Not yet. On SpaceX's October 20, 2026 earnings call, Musk said both companies' boards formed special committees to discuss the idea, but no terms have been agreed and there is no guarantee a deal will happen. He said treating a merger as certain would be overstating it.

What is a special committee in a merger?

A special committee is a group of independent directors, those without a conflict of interest, that evaluates and negotiates a deal when a controlling shareholder or executive is on both sides. Musk said he cannot take part in the SpaceX or Tesla committees because he is a conflicted party.

How would shareholders vote on a SpaceX-Tesla merger?

Any agreement would have to go to shareholders. Musk said Tesla's side would need approval from a majority of all Tesla shares outstanding, not just the shares that vote, which he called quite a high hurdle.

How big would a SpaceX-Tesla merger be?

By Barclays' figures, SpaceX is worth about $2.1 trillion and Tesla about $1.5 trillion, so the combined company would be worth roughly $3.6 trillion. Al Jazeera describes it as potentially the largest merger in history. No price or exchange ratio has been announced.

How did SpaceX and Tesla stocks react to the merger news?

In extended-hours trading, reports put SpaceX up roughly 5% to 12% depending on the outlet and time, and Tesla up about 1.8%. The moves are tangled up with SpaceX's strong earnings, which included $14.6 billion of revenue and its first quarterly profit since its IPO, so the merger effect cannot be isolated.

What happens next if SpaceX and Tesla want to merge?

The committees would negotiate terms with advisers, the companies would announce an agreement and make SEC filings, and shareholders at both companies would vote. Barclays sees Tesla's annual meeting, due by December 6, as a likely venue for a vote and suggests the process could take six to 12 months, though that is an analyst's estimate.

NOT FINANCIAL ADVICE. This post summarizes published reporting about a developing story for education only and is not a recommendation to buy or sell SpaceX, Tesla, or any security. No merger has been agreed, figures differ between outlets and change quickly, and extended-hours prices are not closing prices. Do your own research or talk to a licensed advisor before investing.