Tesla, Inc. (TSLA) stock slipped 2% overnight heading into Friday after Future Fund Managing Director Gary Black warned that SpaceX cannot afford to acquire the EV maker, calling the financial math unworkable. TSLA closed Thursday at $391.06, down 1%, marking its second consecutive session in the red. Black argued that a SpaceX-Tesla deal would dilute SpaceX (SPCX) shareholders by approximately 25%, a burden the aerospace company's board cannot justify despite CEO Elon Musk's 82% voting control and 42% equity stake in SpaceX. The pushback comes amid growing speculation that SpaceX could pursue a merger with Tesla, a debate reignited by early SpaceX investor Chamath Palihapitiya and supported by analysts at Jefferies and JPMorgan who see strategic logic in combining the two companies.
Gary Black Warns SpaceX Cannot Afford Tesla Acquisition
Gary Black said on X that those who believe SpaceX will buy Tesla "don't understand the concept of board fiduciary duty." He emphasized that Musk's control of SpaceX does not remove the board's obligation to act in the interests of SpaceX shareholders. Black identified dilution as the key problem: with SPCX trading at about $132 and continuing to fall, an equity-funded Tesla acquisition would require SpaceX to issue a large amount of new stock. "At $132 and sinking, SPCX can't just buy TSLA in a 25% dilutive equity deal," Black said. "The math won't pass muster."
Chamath Palihapitiya and Wall Street Analysts Support Merger Logic
Black's warning comes days after early SpaceX investor Chamath Palihapitiya revived the merger debate, saying there is "a very obvious industrial logic" to combining Tesla and SpaceX under one capital structure and balance sheet. Palihapitiya previously said that SpaceX was more likely to reverse-merge into Tesla than pursue a traditional IPO, allowing Musk to place his "two seminal assets into one cap table." He also called SpaceX "the outlier of outliers" and said its direct-to-cell business could become "an enormous business" before several other revenue streams mature.
Jefferies said a merger could make strategic sense, estimating that a nil-premium deal could leave Musk with 55.3% voting control while still allowing a premium for Tesla shareholders. JPMorgan similarly called the idea "strategically coherent on paper," citing links across AI, robotics, energy, transportation and space.
Tesla Reports Q2 Earnings on July 22
The merger debate comes ahead of Tesla's second-quarter earnings on July 22, with Wall Street expecting EPS of $0.32 on revenue of $26.02 billion. Jefferies raised its TSLA price target to $400 from $375 and kept a 'Hold' rating after Tesla delivered 480,100 vehicles, beating estimates. The firm also lifted its earnings before interest and taxes (EBIT) forecast to $1.45 billion, citing stronger demand in China and Europe, while remaining cautious about possible Cybercab delays.
Stocktwits Retail Sentiment Remains Neutral
On Stocktwits, retail sentiment for TSLA was 'neutral' amid a 13% decline in 24-hour message volumes. One bullish user said, "$TSLA start of the earnings run, Merger news July 22 or August 550+ coming." Another user said, "$SPCX A $TSLA merger warrants $50 SP with Starlink." So far this year, Tesla's stock has lagged its "Magnificent Seven" peers, making it the group's second-worst performer, down about 13%.
FAQ
What did Gary Black say about a SpaceX-Tesla deal?
Gary Black, Future Fund Managing Director, said on X that SpaceX cannot afford to acquire Tesla because the deal would dilute SpaceX shareholders by approximately 25%. He argued that with SPCX trading at about $132 and falling, an equity-funded acquisition would require issuing too much new stock, and "the math won't pass muster."
When does Tesla report Q2 earnings?
Tesla reports second-quarter earnings on July 22. Wall Street expects EPS of $0.32 on revenue of $26.02 billion. Jefferies raised its TSLA price target to $400 from $375 after Tesla delivered 480,100 vehicles, beating estimates.
Why do some analysts support a Tesla-SpaceX merger?
Chamath Palihapitiya said there is "a very obvious industrial logic" to combining Tesla and SpaceX under one capital structure. Jefferies estimated a nil-premium deal could leave Musk with 55.3% voting control while allowing a premium for Tesla shareholders. JPMorgan called the idea "strategically coherent on paper," citing links across AI, robotics, energy, transportation and space.
