SpaceX stock came under pressure on October 20 as speculation intensified over a potential merger with Tesla. Traders on Polymarket assigned a 66% probability to an official announcement by December 2027, although neither company has confirmed a definitive merger agreement.

The speculation emerged as SpaceX prepared to release its third-quarter earnings on Tuesday. Tesla is scheduled to publish its financial results on October 21. Investors are assessing whether combining Elon Musk’s companies could strengthen their artificial intelligence operations.

Polymarket Odds for a SpaceX-Tesla Merger Rise

Polymarket traders are increasingly betting that Musk will pursue a merger between SpaceX and Tesla. The platform allows traders to buy and sell contracts on real-world events, so its odds update continuously with news flow and reflect market sentiment rather than any corporate confirmation. Such a transaction would be the largest deal on record based on the companies’ reported valuations: Tesla has a market capitalization of $1.48 trillion, while SpaceX is valued at $1.93 trillion, a combined value of more than $.4 trillion.

A combined group would have businesses spanning electric vehicles, satellite communications, artificial intelligence (AI), robotics and satellite launches.

However, completing the transaction would present significant challenges. China and the United States could be involved because of SpaceX’s work for the US government. As a result, rumors have circulated that Musk may consider selling or spinning off Tesla China. A merger between two publicly traded companies would also need to clear shareholder approvals and regulatory reviews, steps that can extend over many months for transactions of this scale. The potential for synergies is also considered relatively limited because the companies operate across broad and diverse industries. A merger would also come as many conglomerates are simplifying their structures and creating independent companies.

General Electric (GE) provides one example. After years of difficulties, its management separated the company into GE Healthcare, GE Aerospace and GE Vernova. Each business has performed well, and their combined market capitalization is now much higher than it was before the spinoff.

Tesla and SpaceX already collaborate in some areas. Their most notable joint effort is the Terafab project, which is expected to cost billions of dollars. The companies aim to become major participants in the growing semiconductor industry.

Earlier this year, Musk merged SpaceX with xAI, the company that owned X (Twitter) and Grok, a rival to ChatGPT. That deal placed his AI and social media holdings under the SpaceX roof, giving him a recent precedent for consolidating entities across his portfolio.

SpaceX Earnings Could Provide More Detail

Beyond the merger speculation, SpaceX stock is also expected to react to the company’s second earnings report as a publicly traded business. The results could provide information about revenue growth and capital expenditure plans. With Tesla reporting a day later, the back-to-back releases will give investors a near-simultaneous view of the financial trajectory of the two companies at the center of the merger talk.

SpaceX’s previous earnings report showed that revenue rose sharply in the second quarter, supported by its Starlink and AI businesses. Revenue increased 92% during the quarter, while Starlink, its satellite internet service, had more than 12 million subscribers.

The average analyst estimate is that revenue growth continued in the second quarter. This time, growth is expected to be driven by the AI business, which has received large orders from companies including Google and Anthropic.

The company is also expected to provide further details about its fundraising efforts. Recent reports said SpaceX was seeking to raise another $40 billion to acquire Nvidia chips for its data-center business. Before that, the company raised funds by selling bonds to finance its acquisition of Cursor.

SpaceX is also expected to discuss its expansion into telecommunications. The company recently spent $8 billion acquiring spectrum, a move that could make it a closer competitor to AT&T and Verizon. Musk will be expected to explain how SpaceX plans to develop this business segment.

Tesla is scheduled to release its results one day after SpaceX. Analysts expect Tesla’s revenue to be largely flat year over year. Traders will focus on free cash flow as the company continues to invest 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.

Source: The Market Periodical.