Dan Ives Sees 90% Odds Of A Tesla-SpaceX Merger: Eyes ‘More And More M&A’ Across Space, Industrials

• Ives tied his bullish take on Tesla to updates on its Optimus humanoid robot production plan and the Cybercab roadmap through 2027.
• He expects AI-driven mergers to extend beyond technology companies into the space industry and industrial supply chains.
• The analyst called Tesla’s current share price a “table pounder,” saying he sees value in both the company’s fundamentals and its potential combination with SpaceX.

Yorkville Ives Partner Dan Ives said Thursday that a merger between Tesla (TSLA) and SpaceX (SPCX) is close to inevitable, a day after CEO Elon Musk confirmed the two companies’ boards are weighing one. 

According to him, there’s a 90% chance that the merger will happen with Tesla shares priced between $500 and $550 apiece. Ives added that Tesla’s quarter was “a huge step forward” and pointed to the start of Optimus humanoid robot production and the Cybercab roadmap into 2027.

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“They’re transitioning from an EV player to what I view as one of the biggest AI players in the market. But then it comes down to a 90% chance that they ultimately merge with SpaceX, and I think that that price point has to be between $500 and $550.”

– Dan Ives, Partner and Senior Managing Director, Yorkville Ives & Co.

Tesla-SpaceX Merger Part Of A Wider Pattern

Ives stated that he expects more mergers and acquisitions to happen across the space ecosystem. According to him, the Tesla-SpaceX tie-up is one piece of a wider pattern.

“It’s a convergence that we’re seeing. I mean, obviously, it started with Palantir. We see what’s happened with SpaceX,” Ives said. “You’re going to see more and more M&A, and I think it just speaks to the second, third, fourth derivatives of AI. It’s not just about tech. It’s going to [spread to] ultimately industrials.”

This comment comes after SpaceX bought xAI in February in an all-stock deal that valued the combined company at $1.25 trillion. In June, four days after its IPO, it agreed to buy AI coding company Cursor for $60 billion in stock, a deal that closed in August. It also paid $17 billion for EchoStar spectrum. 

Satellites are consolidating as well. Rocket Lab (RKLB) agreed in June to buy Iridium for about $54 a share in cash and stock, amounting to around $8 billion including debt. 

In the industrial supply chain, GE Aerospace (GE) agreed last month to buy castings maker Consolidated Precision Products for $11.75 billion to expand supply of what it calls mission-critical castings. 

Musk said on SpaceX’s call that casting is “a really difficult bottleneck” for gas turbine blades, and SpaceX is casting its own. In both cases, a scarce industrial input is driving the deals, which supports Ives’s point that AI’s effects reach industrials.

TSLA, SPCX Stocks Trade Lower Pre-Market

TSLA stock dropped as much as 3.5% in pre-market trade and was among the top trending tickers on Stocktwits at the time of writing. According to Ives, the merger speculation was why Tesla shares were under pressure even though it cut capital spending plans. 

“I just view the stock’s [TSLA] trading here as just a table pounder relative to what I see, not just fundamentally, but on the SpaceX side as well,” Ives said.

SPCX stock was also trading lower in pre-market trade amid the broader market weakness, down around 2%. On Stocktwits, retail sentiment around SpaceX trended in ‘extremely bullish’ territory over the past day while sentiment around TSLA remained in the ‘bullish’ zone.

Musk Says Tesla-SpaceX Merger Is Not Guaranteed

On SpaceX’s earnings call Tuesday, Musk said both boards formed special committees, made up of independent directors, to discuss a merger at shareholders’ request. Musk said he can’t take part because he’s a “conflicted party.” 

“I think it would be a good idea, but it’s really up to the special committees of both companies,” he said. Musk also said people shouldn’t assume a deal is a certainty. 

On the Tesla side, he said, a deal would need a vote of 50% of all shares, “and that’s quite a high hurdle.” Musk owns about 20% of Tesla and about 48% of SpaceX, where Class B shares give him around 82% of the vote.

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