Elon Musk Says SpaceX, Tesla Exploring Merger; Satellite Company's Shares Rally

10:02 AM EDT, 10/21/2026 (MT Newswires) -- SpaceX (SPCX) and Tesla (TSLA) have formed special committees to evaluate a potential merger, Elon Musk, who heads both companies, said late Tuesday, sending the satellite and rocket company's stock soaring on Wednesday. During an earnings conference call Tuesday, Musk said both companies have set up committees of independent directors to explore a potential merger at shareholders' request, according to a FactSet transcript. Musk is not involved in the discussions due to a conflict of interest, he said. "I do think there's a lot of merit to combining the companies," Musk told analysts. Shares of SpaceX, which went public in June, climbed 10% in Wednesday morning trade and have gained 42% over the last three months. Tesla's shares were up 3.8%, but have lost nearly 14% so far this year. Musk cautioned there is no guarantee a potential deal will materialize. "At the end of the day, the shareholders have to be supportive of this, and particularly on the Tesla side, we will need a 50% vote of all shares, not just those who vote, but of all shareholder," he said. "And that's quite a high hurdle to try to achieve." A deal could allow SpaceX and Tesla to share technology, reduce overlapping costs and accelerate development, Saxo Bank said in a Wednesday note. The brokerage estimated the companies' combined market value at around $3.5 trillion. "For investors, the important question is whether combining these businesses would create more value than keeping them separate," Saxo Investment Strategist Ruben Dalfovo said. "Bigger does not automatically mean better." RBC Capital Markets said Monday that a merger between SpaceX and Tesla at about $480 a share could create a combined $3.74 trillion entity, representing a compelling scenario for both companies given the "vertical integration from orbit to ground ecosystem" it can create. Tesla is scheduled to release its latest financial results after markets close Wednesday. Late Tuesday, SpaceX swung to third-quarter earnings year on year as revenue surged past Wall Street's expectations, driven by sharp gains in its artificial intelligence and connectivity divisions. Revenue at the super intelligence division, which houses the company's AI unit, soared 830% year on year to $7.56 billion. The business turned profitable at the operating level, which matters amid growing investor concerns about whether massive AI investments can generate profits, Dalfovo said. President Donald Trump last month signed an executive order directing federal agencies to use the term "super intelligence" instead of "artificial intelligence." SpaceX's connectivity segment's revenue surged 69% annually to $5.25 billion, while the space division increased to $1.77 billion from $1.67 billion in the prior-year quarter. "SpaceX is no longer simply a space company," Dalfovo said. "It is becoming a sprawling infrastructure and technology business, with very different sources of growth, profits and risk." Price: 164.44, Change: +16.65, Percent Change: +11.27