October 21, 2026 | News Desk | Depth Grid
The boards of SpaceX and Tesla have each formed a special committee of independent directors to review a possible merger, Elon Musk said on SpaceX's third-quarter earnings call on Tuesday.[1][2] No terms have been agreed. Musk, who is chief executive of both companies, said he is not part of either committee because he is a conflicted party; he called the arrangement an odd dance in which two groups talk without him in the room.[1]
A SpaceX Tesla merger would rank as the largest corporate tie-up of all time, according to Bloomberg.[3] The announcement arrived alongside a quarter in which SpaceX more than doubled sequential revenue and posted a $4.4 billion profit.[5] Tesla reports its own third-quarter results after the market closes today. This report is information and not investment advice.
What Did Musk Say About the SpaceX Tesla Merger?
SpaceX and Tesla formed special committees of independent directors at shareholders' request to review a merger, Musk said on October 20. He supports the idea, is excluded as a conflicted party and says approval is not certain. Tesla would need approval from 50% of all its outstanding shares.
Musk said the committees were created at the request of shareholders and have not reached agreement on any transaction.[1] He told listeners that there is a lot of merit in combining the companies, citing cooperation on AI software, robotics, SpaceX's orbital data center project Starmind and Terafab, the chip manufacturing project the two companies share.[1] He also cautioned that some people assume a deal is certain and that this would overstate the case, because shareholders have to be supportive.[1][3]
The idea is not new. Bloomberg reported in January that SpaceX had weighed a Tesla merger before choosing to acquire xAI, Musk's artificial intelligence company.[3] What changed on Tuesday is that the question now has a formal governance process behind it. Wall Street already leans toward a deal: analyst Gene Munster of Deepwater Asset Management put the chance of a merger within two years at 95%, a view that remains an estimate and carries no official weight.[8]
What Do SpaceX's Third-Quarter Results Show?
Revenue rose 161% to $14.58 billion against about $12.8 billion expected; the company reported net income of $4.4 billion after a $541 million loss in the second quarter.[5] Adjusted EBITDA reached about $8.8 billion.[6] SpaceX shares rose about 8% in extended trading.[4] The report was the company's second since its June listing on Nasdaq under the ticker SPCX.
The mix of revenue changed the story. The segment now called Super Intelligence, which includes computing capacity leased to Anthropic, Google and others plus Grok and X, brought in $7.56 billion, up from $2.56 billion in the prior quarter.[5] It is now the largest segment at about 52% of revenue by Depth Grid arithmetic. Connectivity, mostly Starlink, produced $5.25 billion and $2.37 billion of operating income; launch added $1.77 billion.[4][5] Starlink ended the quarter with 13.6 million consumer subscribers after adding 1.6 million; average revenue per user rose to $69.[4]
The spending is as large as the growth. Capital expenditures reached $19.59 billion, of which $16.44 billion went to AI, which means SpaceX spent about 134% of its quarterly revenue on capital projects.[7] It ended September with 1.7 gigawatts of nameplate compute capacity and about $90 billion in cash and marketable securities.[6] Management guided first-quarter 2027 revenue to $33 billion to $37 billion.[7] Musk also said he sees annual recurring revenue between $500 billion and $1 trillion by the end of 2027, a projection and not a result.[11] Our earlier report on SpaceX's $40 billion Nvidia chip financing covers how that compute buildout is being funded.
How Hard Is the Shareholder Vote?
A SpaceX Tesla merger faces a lopsided vote. Musk holds more than 50% of SpaceX voting power but only about 20% of Tesla; Tesla needs approval from 50% of all outstanding shares, a bar Musk called high. Barclays expects an all-stock deal with SpaceX as the buyer and a premium for Tesla holders.
The SpaceX listing cemented Musk's control, which would make it easier to win support from SpaceX shareholders.[1] Tesla is the harder case. Musk said approval would need half of all shareholders, a higher bar than a majority of those who vote; he described it as a high hurdle.[3] Barclays puts Musk's Tesla stake near 20% and estimates that a deal at current values would leave him with about 37% of the combined company.[9]
The size mismatch drives the exchange ratio. Barclays uses market values of $2.1 trillion for SpaceX and $1.5 trillion for Tesla; it expects the bigger company to be the buyer with Tesla holders receiving a premium.[9] Those figures add up to $3.6 trillion before any premium by our arithmetic. CNBC puts Tesla's market value at almost $1.5 trillion after a 17% decline this year.[4] Barclays analyst Dan Levy sees a possible announcement before December, which is a forecast and not a disclosed timetable.[9]
What Governance Questions Does the Process Raise?
Special committees are the standard tool when a controlling executive sits on both sides of a deal. Tesla used one in 2018 when it evaluated a proposal to go private; the board appointed three independent directors then.[12] The unusual feature this time is overlap. TechCrunch notes that director Ira Ehrenpreis counts as independent at both companies, serving on Tesla's board and chairing the compensation and nominating committee at SpaceX.[1] The companies have not said who sits on either committee.
Business ties already run deep. SpaceX acquired xAI earlier this year at a combined valuation of about $1.25 trillion; Tesla's $2 billion investment in xAI became a SpaceX stake in that transaction.[10] SpaceX disclosed buying nearly $700 million of Tesla Megapack batteries in 2024 and 2025 to power xAI data centers near Memphis.[10] TechCrunch also reports that Valor Equity Partners, led by SpaceX director Antonio Gracias, holds a 3.4% SpaceX stake and financed SpaceX's AI hardware purchases through leaseback arrangements.[1] Independent directors will have to weigh each of these relationships when they price a deal.
What Should Investors Watch Next?
- October 21: Tesla's third-quarter report and call, where Musk or other executives may be asked about the committees.
- Disclosure of committee members, legal advisers and financial advisers, which typically follows within weeks of a formation.
- Any formal proposal on exchange ratio and structure; whether Tesla shareholders get a premium.
- The proxy materials and vote mechanics at Tesla, given the requirement for 50% of all shares.
- SpaceX's next quarterly report against its $33 billion to $37 billion guidance for the first quarter of 2027.
Any combination would also need regulatory clearance. For readers tracking how other SpaceX businesses are being built, our report on the SpaceX spectrum deal with AT&T, Verizon and T-Mobile covers the connectivity side; our IPO coverage tracks the listings that shaped this year's market.
Common Questions
Has SpaceX agreed to merge with Tesla?
No. On October 20, 2026 Musk said both boards formed special committees of independent directors to review a possible merger. The committees have not agreed on terms; Musk said approval from shareholders is not guaranteed.
What shareholder vote would a Tesla SpaceX merger need?
Musk said Tesla would need approval from 50% of all shareholders, a higher bar than a majority of votes cast. Musk holds more than 50% of SpaceX voting power, so the SpaceX vote is considered easier.
How did SpaceX perform in the third quarter of 2026?
SpaceX reported revenue of $14.58 billion, up 161% year over year; net income of $4.4 billion. Its Super Intelligence segment led at $7.56 billion, Starlink reached 13.6 million consumer subscribers and capital spending was $19.59 billion.
Sources
- Kirsten Korosec, "SpaceX and Tesla boards form special committees to review merger," TechCrunch, October 20, 2026. techcrunch.com
- NBC News, "Elon Musk says SpaceX and Tesla have formed special committees to discuss merger idea," October 20, 2026. nbcnews.com
- Bloomberg, "Musk Says SpaceX and Tesla Have Begun Exploring a Merger," October 20, 2026. news.bloomberglaw.com
- CNBC, "Musk says Tesla and SpaceX formed special committees to discuss merger: Live updates," October 20, 2026. cnbc.com
- Fortune, "SpaceX posts first operating profit as public company as AI revenue nearly triples," October 20, 2026. fortune.com
- Investing.com, "Earnings call transcript: SpaceX tops Q3 2026 estimates, shares jump after hours," October 2026. investing.com
- BigGo Finance, "SpaceX's AI Unit Overtakes Starlink as Q3 Revenue Jumps 161%," October 2026. finance.biggo.com
- Axios, "SpaceX, Tesla explore merger, Elon Musk confirms," October 20, 2026. axios.com
- TIKR, "Barclays Analysts See Rising Potential For SpaceX-Tesla Merger," updated October 16, 2026. tikr.com
- Qatar Tribune, reporting CNBC, "SpaceX-Tesla merger talk intensifies ahead of rocket firm's IPO." qatar-tribune.com
- Yahoo Finance, "SpaceX earnings Live: SpaceX beats on earnings, capex comes in less than expected," October 20, 2026. finance.yahoo.com
- Tesla, "Tesla Announces Formation of Special Committee to Evaluate Potential Going Private Transaction," August 14, 2018. ir.tesla.com
Related Analysis
- SpaceX's $40B Nvidia Chip Financing: What We Know
- SpaceX Spectrum Deal With AT&T, Verizon and T-Mobile
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- More IPO Coverage on Depth Grid
Depth Grid News Desk | depthgrid.in
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