- The firm added that Tesla and SpaceX CEO Elon Musk aims to expand his control over the AI ecosystem.
- Wedbush stated that a potential merger of the two companies serves as the ultimate prize and brings them to the forefront of the AI race.
- Tesla received clearance from the FTC earlier this month regarding the conversion of the EV giant’s investment in xAI into a stake in SpaceX.
Tesla Inc. (TSLA) and SpaceX are expected to merge in 2027, with the groundwork already in place for the two companies to join forces, according to analysts at Wedbush.
Wedbush reiterated its ‘Outperform’ rating for Tesla with a price target of $600, implying an upside of nearly 63% from the stock’s closing price on Thursday.
Koyfin data shows that the average 12-month price target for TSLA is $421.27, implying a 13% return potential. Of the 48 analysts covering the stock, 23 have a ‘Strong Buy’ or ‘Buy’ rating, 17 recommend ‘Hold’, and eight analysts have either a ‘Sell’ or a ‘Strong Sell’ recommendation.
Tesla shares were down nearly 1% in Friday’s pre-market trade. Retail sentiment on Stocktwits around the company trended in the ‘bearish’ territory, with message volumes at ‘high’ levels at the time of writing.
Why Is Wedbush Bullish?
Wedbush stated that the recent announcement of Terafab ties both Tesla and SpaceX together, making it more feasible to merge operations given the overlap now being built out across the two companies, with this as the first step.
“While there are plenty of regulatory hurdles from the FTC and DOJ, this remains Musk’s end goal by owning 25% of TSLA over time as it enters the most important growth chapter in the company’s history,” Wedbush stated, according to a note on X that was reposted by the firm’s Global Head of Tech Research, Dan Ives.
The firm added that Tesla and SpaceX CEO Elon Musk aims to expand his control over the AI ecosystem, with a potential merger of the two companies serving as the ultimate prize and bringing them to the forefront of the AI race.
Tesla’s Stake In SpaceX
Tesla received clearance from the U.S. Federal Trade Commission (FTC) earlier this month with respect to the conversion of the EV giant’s investment in xAI into a stake in SpaceX.
Wedbush noted that this $2 billion investment still represents a minor stake of less than 1% in SpaceX, based on the aerospace startup’s expected valuation.
During the company’s fourth-quarter (Q4) results, Tesla announced that it had invested $2 billion in Musk’s AI startup, xAI, while indicating that it is likely to build a semiconductor manufacturing facility.
Musk Unveils Terafab
In a joint Tesla-SpaceX announcement last week to unveil Terafab, Musk stated that they are “starting a galactic civilization.”
The Terafab project is a chip manufacturing venture between Tesla and SpaceX. The two companies aim to manufacture two types of chips, one for the Optimus humanoid robot and Tesla vehicles, and another tailored for space environments.
Musk also showed off a rendering of a “mini” AI data center satellite, stating that it would have 100 kilowatts of power capacity, with the Tesla and SpaceX CEO adding that he expects this to eventually reach the megawatt range.
This comes after SpaceX sought permission from the Federal Communications Commission (FCC) in January to launch a million data center satellites.
TSLA stock is down 17% year-to-date, but up 37% over the past 12 months. The SPDR S&P 500 ETF Trust (SPY) is up 13% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 18%.
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