TSLA Stock Climbs Amid Reports Of SpaceX Tie-Up As Early As December

• SpaceX and Tesla are working through the terms of a potential tie-up, including the structure of the combined entity and governance arrangements, Bloomberg reported. 
• The companies would need to address how to isolate Tesla’s large and profitable China manufacturing operations from SpaceX’s U.S. government and defense contracts, people familiar with the talks said.
• The discussions build on comments Musk made in October, when he said the boards of both companies had formed special committees of independent directors to evaluate a combination.

Shares of Tesla (TSLA) closed higher on Thursday after reports that merger discussions between itself and SpaceX are progressing and could lead to an announcement as soon as December.

TSLA stock opened on Thursday nearly 1.2% lower, before closing 2% higher as investors reacted to the possibility of the largest corporate combination in history. SPCX stock, meanwhile, rallied as high as 5% during the session before closing flat.

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Talks Advance Toward Possible December Announcement

SpaceX and Tesla are working through the terms of a potential tie-up, including the structure of the combined entity and governance arrangements, Bloomberg reported, citing people familiar with the matter. The companies have also considered a scenario in which any announcement slips into early 2027, the report said.

The discussions build on comments Musk made in October, when he said the boards of both companies had formed special committees of independent directors to evaluate a combination.

Musk outlined what he sees as the strategic rationale, pointing to overlapping work in “superintelligence,” or the company’s term for artificial intelligence endeavors. Areas of potential cooperation include superintelligence software, chip design, the Tesla-SpaceX Terafab semiconductor project, robotics, and mass-to-orbit capabilities tied to the Starlink constellation, he said, adding that there is “no guarantee” of a deal. He also noted that he is not part of the discussions due to his role as CEO of both companies.

While Tesla is currently valued at $1.6 trillion, SpaceX is valued at about $1.9 trillion, lining up a merger to be the biggest deal ever.

Hurdles Remain For A Merger

Significant obstacles stand in the way of a deal. The companies would need to address how to isolate Tesla’s large and profitable China manufacturing operations from SpaceX’s U.S. government and defense contracts, people familiar with the talks told Bloomberg. A JPMorgan note last month highlighted the tension between those national-security sensitivities and Tesla’s China footprint as a key challenge for regulatory and shareholder approvals.

The transaction would also face political scrutiny after Democrats took control of Congress in the midterms and pledged closer examination of Musk’s businesses, the report noted.

How Did TSLA, SPCX Retail Traders React?

On Stocktwits, retail sentiment around TSLA stock jumped from 'bearish' to 'neutral' territory over the past 24 hours, while message volume stayed at 'normal' levels.

Meanwhile, sentiment around SPCX stayed within the ‘bullish’ territory over the past 24 hours, while message volume stayed at ‘normal’ levels.

A Stocktwits user framed a potential deal as good for Tesla shareholders and bad for SpaceX holders.

While TSLA stock has slipped 12% year-to-date, SPCX closed Thursday at about $140, above its June iPO price of $135. 

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