Investor Gary Black predicted on Monday that a potential merger between Space Exploration Technologies Corp. (NASDAQ:SPCX) and Tesla Inc. (NASDAQ:TSLA) may not result in huge profits for the EV giant’s investors in a stock-for-stock deal.
SpaceX Will Offer $420/Share For Merger
In a post on the social media platform X, Black said that a deal between the two Elon Musk-led enterprises was “inevitable” because of the billionaire’s control over the votes in both companies.
“Since any deal would be $SPCX stock for $TSLA stock,” he said, adding that the deal “will not be as compelling” given the “massive dilution and all-equity economics.”
He also said that he expects SpaceX’s offer price for Tesla to be “in the neighborhood of $420/TSLA share,” but said that the price “will likely get arbitraged down given the approximate 6-12 months needed between a deal announcement and deal close.”
SpaceX’s acquisition of Tesla would also not result in “huge windfall for TSLA shareholders on a SPCX/TSLA stock-for-stock deal” because the combined EBITDA or Earnings per share of the SpaceX-Tesla entity would “follow the acquiring company’s multiple,” that is, SpaceX, the investor said.
In a separate post, the investor doubled down on his prediction that the deal would not result in Tesla shareholders benefiting from windfall profits. “Why do $TSLA investors on X keep focusing on a $SPCX – $TSLA merger as a value driver?” the investor asked.
He argued that even if SpaceX paid a 15%-20% premium on Tesla shares in the stock-for-stock deal, it would not “add much value, given SPCX’s relatively low EV/EBITDA multiple.”
Cathie Wood Makes Major Tesla 2031 Prediction
Investor Cathie Wood-led ARK Invest published a report on Monday, predicting that Tesla’s stock will see a near 1,100% upside in value to $4,400 by 2031, while also predicting that both Tesla and SpaceX will merge within five years. ARK also predicted that Tesla’s enterprise value will mostly comprise its Robotaxis.
Talks of a merger between Tesla and SpaceX have gathered pace since Tesla debuted its Roadster high-performance EV with SpaceX-sourced gas thrusters that can make the car hover.
Following its debut, investor Ross Gerber of Gerber Kawasaki Wealth Management, as well as Tesla Bull Dan Ives, predicted that a merger between the two companies was coming.
Price Action: SPCX stock was down 0.99% to $146.49 during pre-market trading on Tuesday, according to Benzinga Pro data. TSLA stock was down 0.27% to $367.06 at the last check.
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