Tesla (TSLA) stock made headlines as it closed at $373.71 on Tuesday, marking a 2% increase and further climbing to $382.15 in after-hours trading. This surge coincided with CEO Elon Musk’s update on a potential merger with SpaceX during SpaceX’s third-quarter earnings call.
Musk revealed that both Tesla and SpaceX have instituted independent special committees to explore the viability of a merger. He described the potential deal as a “good idea,” although he emphasized that no terms have been finalized. For the merger to proceed, it would require the approval of at least 50% of all outstanding Tesla stock.
In light of these developments, RBC has speculated on a hypothetical all-stock transaction where SpaceX would acquire Tesla at $480 per share, valuing the combined entity at an impressive $3.74 trillion. Meanwhile, Cantor Fitzgerald reiterated its Overweight rating, maintaining a price target of $485 on Tesla ahead of the company’s forthcoming earnings report.
Market sentiment appears bullish, with options traders indicating optimism; the put-to-call ratio on near-term contracts stands at 0.47, reflecting a favorable outlook.
Ark Invest Sets Ambitious Targets for Tesla
Cathie Wood’s Ark Invest has also made waves with its latest long-term projections for Tesla. The firm has set a base-case target of $4,400 by 2031, while envisioning a bullish scenario that could see shares soar to $5,000. The bear case, however, remains at a more conservative $3,300, although all three targets significantly exceed current trading levels.
Ark’s forecasts suggest that robotaxis could represent approximately 80% of Tesla’s enterprise value by 2031, a decrease from about 90% in their previous 2024 model. The firm also anticipates significant growth for the Optimus robot-as-a-service concept alongside the expansion of robotaxis.
Moreover, Ark posits that a merger between Tesla and SpaceX could materialize within the next five years, projecting a staggering $3.8 trillion in revenue and $2.7 trillion in EBIT by 2031. Notably, SpaceX is expected to contribute around 62% of this revenue and 69% of the EBIT, although Ark continues to view Tesla as a standalone entity in its models.
In recent news, Tesla showcased its revamped Roadster at SpaceX’s testing facility in McGregor, Texas, demonstrating impressive capabilities by driving upside down on a curved ramp. Musk highlighted that the new model can accelerate to 60 mph in under a second and achieve a top speed of 230 mph, with production slated to begin in 2028. A $50,000 deposit is required for the Performance version, while the Thrust version will require a substantial $250,000 deposit.
Adding to the positive sentiment, SpaceX’s stock experienced an 8% increase in after-hours trading following its third-quarter results. Overall, the Nasdaq gained 0.8% and the S&P 500 climbed 0.3% during Tuesday’s regular session, setting the stage for Tesla’s earnings report expected on Wednesday.
