Dear Fellow Investor,
Good morning. Happy Sunday!
I hope you’re enjoying the weekend.
But first, let’s talk about Elon Musk.
On Thursday night, Tesla finally showed off its new Roadster.
Elon first unveiled the concept back in 2017.
Tesla has taken $50,000 deposits on it since then and missed every promised delivery date.
This one was worth the wait for the fans.
It was revealed at a SpaceX test site in Texas.
It’s fitted with SpaceX thrusters.
Tesla says it goes from zero to 60 in less than a second.
Elon says it enters production in 2028.
And he says it will be the last Tesla built to be driven by a human.
I’ll be honest with you.
The Roadster is a fun car, but it won’t move Tesla’s numbers.
But the Roadster wasn’t the real story this week.
The real story is what one Wall Street bank thinks comes next.
The Merger Everyone’s Whispering About
On Wednesday, analysts at Barclays put out a note that got a lot of attention.
They believe Elon could announce a merger of Tesla and SpaceX as soon as this fall.
Tesla has to hold its annual shareholder meeting no later than December 6th.
Barclays says if Elon wants a vote at that meeting, an announcement would have to come by late October or early November.
If not, they still expect a deal within the next six to twelve months.
The most likely structure, they say, is SpaceX buying Tesla in an all-stock deal.
Tesla shareholders would get SpaceX shares.
Barclays says Wall Street has come to expect a combination.
But shareholders would still have to approve it.
And a deal this size carries plenty of risk on both sides.
No wonder Tesla became one of the most talked-about stocks in America this week.
Why Elon Would Want It
Fair question. Let’s dig in.
Barclays says the financial savings would be modest.
The real prize, in their words, is “vertical integration.”
Tesla has the physical AI — the robotaxis and the Optimus robots.
SpaceX has the AI models, the rockets and the plans for data centers in space.
And both companies are counting on Terafab, the giant chip-manufacturing project Elon is planning.
Right now, every big decision has to go through two separate boards.
Put them together and that friction goes away.
One company. One board. One boss making the call.
And then there’s control.
Elon owns about 48% of SpaceX and holds roughly 82% of the voting power.
Barclays figures he’d own about 37% of a combined company — and about 56% of the votes.
Where I Come Down
Regular readers know I ask four questions before I buy anything.
Do I understand the business?
Am I comfortable with management?
What is it worth?
And what do I have to pay?
A Tesla–SpaceX merger would test question two and question four at the same time.
When one man controls both sides of a deal, somebody has to look out for the shareholders.
The price will matter enormously.
I’m not against it.
Elon has spent twenty years making the experts eat their words.
But I’d want to see the terms before I cheered.
Here’s what I’m more confident about.
Whether the merger happens this fall, next year or never, Elon’s empire keeps writing checks.
Follow the Suppliers
Every time Elon builds something enormous, the biggest percentage gains don’t always go to Elon’s companies.
They often go to the smaller firms standing next to him.
A merger would make Elon’s empire even bigger.
It would also make it hungrier for partners.
Because there are some jobs even Elon doesn’t want to do himself.
Take the International Space Station.
It was designed to last fifteen years.
It’s been up there for twenty-five.
And America can’t leave the sky empty — China already has its own station circling overhead.
NASA is paying SpaceX up to $843 million to bring it down safely.
But SpaceX isn’t building the replacement.
NASA has told Congress it plans to spend roughly $1 billion a year renting space on a privately built station instead.
There’s one small company NASA has been funding since 2021 to build exactly that.
Its design has passed NASA’s official review.
It has a life-size mockup sitting at Johnson Space Center in Houston.
Northrop Grumman dropped its own plans and joined this company’s team instead.
It has already paid SpaceX $90 million to carry its station into orbit.
It has about half a billion dollars in contracts signed with other customers.
And it has a defense arm with well over $300 million in backlog.
Elon is the ride.
This company could be the landlord.
Here’s who it is and how the deal works:
Enjoy the rest of your weekend.
I’ll see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine