Tesla’s stock saw a notable increase on January 30, 2024, following reports of a potential merger with SpaceX, the aerospace company led by Elon Musk. While this development excites some investors, it also raises important questions regarding the implications for Tesla’s shareholders.
Understanding the Merger Potential
Investors are buzzing about the prospect of combining Tesla and SpaceX, with many viewing SpaceX as the more attractive business. The interest in this merger stems from several factors, including the potential to streamline SpaceX’s public offering process. The company has been considering going public in 2024, and a merger with Tesla could help avoid some of the costs associated with an initial public offering (IPO).
Yet, a key concern revolves around ownership distribution in a merged entity. If the merger were to align with current market values, Tesla shareholders could hold approximately 63% of the combined company. While this seems favorable, it may not translate into the expected benefits for Tesla investors.
Evaluating CEO Compensation
The implications of a merger extend to Elon Musk’s compensation package as well. In November 2025, Tesla shareholders approved a new plan tied to increasing the company’s market value. A merger with SpaceX, valued at approximately $800 billion, could elevate Tesla’s market standing. However, if the new entity’s value is proportionally adjusted, Tesla’s stock might not reflect this increase in value.
As a result, while Musk may approach the performance milestones set in his compensation package, Tesla shareholders may not experience the anticipated benefits. The operational targets linked to Musk’s pay are primarily related to Tesla’s core business areas, such as automotive production and technology advancements.
The merger could influence certain profitability metrics, including EBITDA targets, but it remains uncertain how this would affect Musk’s existing compensation plan. A revision of this plan would be unusual, especially given its recent approval.
Future Considerations for Investors
At this stage, the potential merger is far from guaranteed. Historical discussions of similar mergers have often come to nothing. Nevertheless, should the merger proceed, investors in both Tesla and SpaceX will need to carefully consider the implications.
For SpaceX, merging with Tesla could provide a more cost-effective route to market than a traditional IPO. This possibility may attract interest from SpaceX investors who see value in a merger. Conversely, Tesla shareholders might initially view the merger as advantageous, but the actual benefits could be more complex.
Ultimately, if the merger comes to fruition, Elon Musk may emerge as the primary benefactor. As the situation develops, Tesla shareholders should remain vigilant and informed about how these changes could affect their investment.
Investing in stocks like Tesla requires careful analysis and consideration of evolving circumstances. As the landscape shifts, it will be crucial for investors to maintain a comprehensive understanding of potential outcomes.
