During Tesla's Q2 earnings call on the evening of July 22, an analyst asked Elon Musk the question closely watched by shareholders of his two largest ventures: whether SpaceX is planning to acquire Tesla, the electric vehicle, battery and robotics company.

Musk replied, "We can't talk about combining companies and things like that on an earnings call. It's got to be done with the appropriate process." The answer did not rule out the possibility that he is seriously considering a transaction. Musk then described the potential advantages of closer alignment, pointing to multiple collaborations and "more and more overlap…on so many fronts."

He cited Digital Optimus, the "human office worker" project described as a SpaceX-Tesla joint venture, and said it is powered by Grok, the AI chatbot developed by xAI. Musk also said mobile and internet services from SpaceX's Starlink satellite network are "getting integrated into all our car vehicles."

The comments have drawn attention to the possibility of a SpaceX-Tesla merger and to how much the financial terms of any such deal may have shifted in only a few weeks, particularly for SpaceX shareholders. The question also carries echoes of Musk's 2016 push for Tesla to acquire SolarCity, a solar installer where he served as chairman and largest shareholder. That all-stock deal, valued at roughly $2.6 billion at announcement, faced shareholder lawsuits alleging it functioned as a bailout of a struggling affiliated company; Tesla ultimately paid $60 million to settle one such suit without admitting wrongdoing.

After SpaceX's widely discussed IPO on June 12, its shares rose from the $135 offer price to a peak of $211 on July 16. At that level, the company had a valuation of $2.8 trillion. Analysts at the 15 firms involved in the underwriting, including Goldman Sachs, Morgan Stanley and J.P. Morgan, said the gain was likely to hold. On average, they projected that SpaceX shares would trade at about $225 over the following 12 to 18 months.

At that time, SpaceX's elevated share price appeared to give Musk a strong stock-based currency for a possible Tesla acquisition. In mid-July, SpaceX was valued at $2.8 trillion, compared with Tesla at $1.6 trillion. If the deal were paid in stock and the announcement did not move either company's share price, SpaceX could have bought Tesla by issuing new shares equal to 57% of its existing share count, based on the ratio of $1.6 trillion to $2.8 trillion.

Under that scenario, SpaceX could have used what appeared to be a highly valued stock to acquire Tesla, an asset Musk has characterized as strategically important, while existing SpaceX shareholders would still have retained almost two-thirds of the combined company.

Since then, however, both stocks have fallen sharply, changing the financial equation. By mid-afternoon on July 24, Tesla had declined from $405 to $308, a drop of 24%. SpaceX fell more steeply, sliding from $211 to $113, or 46%.

At those prices, SpaceX's market capitalization stood at $1.49 trillion, while Tesla was valued at $1.22 trillion. To acquire Tesla in an all-stock transaction at those valuations, SpaceX would need to issue new shares equal to 82% of its existing share count, based on the ratio of $1.22 trillion to $1.49 trillion. Rather than owning nearly two-thirds of the combined company, existing SpaceX investors would own about 55%, implying dilution of roughly 45%.

That rapid change makes a potential deal far less attractive for SpaceX shareholders than it appeared only weeks earlier. Any broader strategic vision Musk may have for combining the companies now faces a more difficult valuation problem. At current prices, SpaceX would be paying much more heavily for Tesla in share terms. Issuing that amount of stock could put pressure on SpaceX's shares, with the comparison made to the AOL-Time Warner transaction — the 2000 all-stock merger whose collapse in value became a defining cautionary tale of the dot-com era and a recurring reference point in M&A literature.

SpaceX investors would move from owning 100% of the company's rocket and AI-related assets to owning only a little more than half of those assets in a combined group, while receiving relatively small additional earnings and significant negative free cash flow in return. Tesla shareholders also might not benefit if they did not sell immediately, because they would hold SpaceX shares that could be pressured by the scale of the dilution.

On those numbers, the transaction would appear difficult for both sides. Beyond the arithmetic, any deal combining two of the most closely watched companies in aerospace and automotive would face substantial regulatory review, including antitrust scrutiny from U.S. competition authorities and likely interest from foreign regulators given the global footprint of both businesses. Musk's comments on the call, however, emphasized the long-term possibilities of overlap between the companies rather than the immediate arithmetic of a potential merger.

This story was originally featured on Fortune.com.