Elon’s Final Boss Move: IS Tesla-SpaceX Merger HAPPENING? 🚀

Hello everybody. It is Wednesday. This

is an un unprompted video, but the world

is buzzing.

Absolutely buzzing right now. Many

believe it's the foregone conclusion

that Tesla and SpaceX will merge. which

we know already this week XAI and SpaceX

merged and of course XAI bought X and

now people are talking about building

this huge big super case. So, I'm going

to go through what investors need to

think about, assign the probabilities,

how to play this, if it's going to

happen or if it's not going to happen.

And we're going to, as usual, break out

the math behind it all. And it is a very

strange situation, but it's very

important in markets to understand where

the puck is going to be. Let's go. And

uh thank you as well to the mods in chat

for being here. And something is

different on my screen, but that's okay.

We'll work through it. And this is not

financial advice, just a guy on the

internet assessing probabilities. It's

all I do. And a big thank you as well to

Mr. Bump. Subscribe to your YouTube

channel years ago. And I wish I jumped

into Patreon sooner. Thank you for being

part of Patreon. Mr. Bump. Now, first

I'm going to break down the case for why

it would make complete sense to do Tesla

SpaceX merger. And the reasons will

surprise you surprise you as well. Yeah,

yeah, yeah. There's a reason I've been

talking about AI. Some people are

worried about crypto. This is AI is the

future, everybody. Go where the oxygen

is. It's it's huge. Anyway, Tesla,

SpaceX, uh, merger believers. Shout out

to people like Shamath who actually lit

the fire by the way of this. These are

the prominent people who have publicly

expressed belief or high optimism that a

Tesla SpaceX merger is going to happen.

Uh Kathy Wood, Arc Invest, CEO, Dan

Ives, Wed Bush Securities. I can't

remember what he said exactly, but he

said he sees a very large chance,

growing chance of Tesla merging with

Space Xi entity. Uh I think he gave a

time frame of 12 months if I'm not

mistaken. And then Aloia, shout out to

AJ, him and I have been on this from the

beginning and it's like six weeks now

when I did my first SpaceX Tesla video.

and Homemar's catalog, friend of the

channel, too. Uh, a lot of people

believe it makes total sense.

Let's dig in a little bit deeper. First

of all, SpaceX IPO you could argue is

already priced in. You know, they had a

$ 1.5 trillion plan. They bought

probably a $300 billion asset. I

assigned 1.8 trillion. So, it's kind of

priced in. So, what

reasons why this could happen? And this

goes back to kind of politics,

geopolitics, and all that stuff. But

this is my wild card. If they get a big

contract from the Department of Defense,

we know space is very, very important

for protection,

for communication, all that type of

stuff. Uh the whole space thing, people

used to think it was like Star Trek, but

now it's very real. It's also very

feasible, very possible. And the US

government has added half a trillion

dollars to their defense budget if they

decide to leverage somebody like NASA,

Lockheed or Boeing to do space. Or they

could bet on Elon Musk to get it

actually done at a far less cost than

the others. That could result in a large

amount of money for SpaceX.

Good. Then there's geopolitics, too.

Let's talk about the elephant in the

room. As you know from this channel, I

believe China has a lot more power than

the US will have a lot more power.

They're catching up with semiconductors.

They are building brilliant open-source

AI models. They are a force to be

reckoned with. Those with the most

compute, with the most energy, will win

the AI war, and that's absolutely

critical. And there is only one way for

the US to find its way out of this. And

that is with an entrepreneur like Elon

Musk. love him or hate him, he gets poop

done. Very important. Now, one other

reason why it could happen, and that is

Elon gets his 25% control, so he can't

be flicked out by some radical judge or

uh a rogue board that goes one way or

the other. That way, he has enough

control to assure his future. Now, after

all of those reasons, I'm now going to

explain why it won't happen. And you

make your own decision. I'll make I'll

give you the conclusion at the end.

Don't worry about it, too. This is the

case against a Space X merger. And I

won't go into too much detail, but you

can pause the slide and read. But first

of all, there are a ton of fiduciary

hurdles. You know, you got people like

Peter Theal, etc. And people who are in

early to SpaceX, Google, they want it to

be its own thing. They maybe don't want

shares in Tesla. And that whole parody

thing 1 and a2 trillion 1 and a2

trillion is kind of messy. Also huge

dilution risk. Tesla investors waiting

for FSD robo taxi returns would face

significant dilution to fund long-term

projects like Mars, Starship, etc. The

valuation mismatch as well. You could

argue actually if with XAI and SpaceX

1.8 trillion perhaps is my number that's

worth more than Tesla. And a lot of

people believe the cash flow could

happen. And you know the double cash

flow myth. I think it's going to be a

long time before

SpaceX kicks off a ton of cash flow to

make this merger worthwhile. They're

both at different stages of their lives.

They're both going down different paths.

Therefore, I believe there is no

financial case to be made for a merger.

Also, it would be a regulatory

nightmare. One quick thing you could

plug out here is merging a public

consumer company, auto AI company with a

major defense contractor invites very

complicated security defense clearances

would be messed up as well with

departments of defense contracts, space

contracts, etc. Just nightmare nightmare

would make no sense to poison the well

for both Tesla and SpaceX. Also,

governance headache, biggest nightmare.

Musk control is cleaner when entities

are separate.

A merger would complicate a voting

power, complicate the boards, complicate

who knows what out there. And also,

SpaceX is focused on long-term bets like

Mars, like the moon, and like

space-based data centers. We'll get to

the timelines of those, too. uh while

Tesla is based on quarter-to-arter

pressure for earnings calls and there

will be a huge culture clash as well

between the different DNA of the key

employees across this. You know, people

get lost in the shuffle and that's not

going to good as well. Let's look at

market sentiment and probabilities. We

know polyark is like 15 to 18% betting

odds of it happening i.e. a merger that

is very low. analysts believe 25% chance

and SpaceX standalone IPO I give 85%

chance right now. Now

why SpaceX IPO will probably happen i.e.

not a merger with Tesla. First of all

they've been planning for this. They've

been preparing for this. The June target

is already known. It's June 2026. uh

private tenders can no longer sustain

the scale of their ambitions to do the

type of stuff that they need to do. They

have huge capital needs. Uh they want to

start deploying a starship fleet,

building moon and Mars infrastructure,

expand Starlink V3, tens of billions of

liquidity, stick a million satellites in

space, etc. Public markets are the only

place where you can get this unless it's

a huge amount of money that could come

from the wild card from the government,

but I don't see that happening. And an

IPO also very importantly provides that

exit for the top engineering talent or

the ability for them to cash in and

that's crucial for retention as well of

key people within the companies. A quick

view as to my projected prices IPO

mechanics is a lot of money on hand here

just by floating SpaceX and XAI 1.8

trillion is my bogey. They should easily

be able to raise $50 billion and that

will give Elon all the liquidity he

needs. He doesn't have to, you know,

poison the well, confuse the pooch,

whatever. And this is going to happen in

2026, I believe. So, and another thing,

a couple of technical factors here that

are very, very important when think

about SpaceX. A lot of people think, oh,

we're going to have data centers in

space by the end of the year or next

year. No, it's not going to happen

because there's a lot of technical stuff

that even me as a lay person can see.

So, LEO is not a friend of the channel.

LEO means low Earth orbit and Starship

getting stuff to low Earth orbit today.

I think with Falcon 9, it's about $2 to

$3,000 per kilogram. We need to get to

$100 per kilogram. Sticking stuff in low

Earth orbit to make spacebased data

centers worthwhile. And we are a long

way away from that my friends. Yes, they

are testing V4 pretty soon. Yes, it can

carry a lot of stuff up there but yes

there is a lot of technical requirements

and difficulty. two of them that I see

as well again as a non-space technical

person thermal management the vacuum

problem in space it has no air cooling

no water cooling therefore it needs to

be radiated away uh using the Stefan

Boltzman law which requires massive

radiator panels for example a 1 megawatt

Elon already has a gigawatt data center

a 1 megawatt data center would need

thousands of square meters of radiators

creating immense drag and mass up there

in space also for the ability for them

to be hit by things floating through

space and radiation hardening. It messes

with advanced AI chips that are less

than 5 or 7 nmters and they are very

vulnerable to radiation and shielding is

required and shielding is very heavy a

kilogram per kilowatt and this also is a

huge technical barrier that needs to be

overcome. We are not there yet. Not by

any stretch of the imagination. So when

people talk about putting data centers

in space next year, no. These things

take a long time. It's never been done

before. It's tricky. Lots of other

tricky stuff to bear in mind regarding

Earth for space. Yeah, cooling

efficiency is better, but in space you

need a lot of radiators. As I mentioned,

hundreds of meters of square meters of

this to happen. maintenance. You can fix

things on Earth pretty easy. In space,

you can't. If it breaks, you're toast.

You're cooked. You need to just deploy a

new one or have some redundant

satellites up there. Latency less than 5

milliseconds

and needs to be 20 to 100 milliseconds

in space. So, I don't know if it's fast

enough yet. We still need to get there,

too. And yeah, land is cheap and

renewables, nuclear are possible, but

the cost structure for space is

extremely expensive. Very high launch

costs way more than $100 a kilogram.

It's optimistic. And a lot of weight for

shielding. And it takes years and years

to plan this. So again, going back to

space data centers 2027, not going to

happen. Don't hold your breath, my

friends. This is a long way off. And

that's a big part of the case I'm making

too because we're on the cusp of

something huge with Tesla but not with

SpaceX. Big difference. Now when when

space data centers well is a little

idea. So Starship hopefully be fully

baked by 2027

and refueling in space is going to be

very important. 2028 they'll be the

first prototypes small pilots of these

little data centers in space. And then

2029, 2030 maybe the first commercial

revenues from these data centers in

space. And after 2030, material revenue

impact. So we'd have to wait 5 years for

this to happen. And you know, stock

markets, equity markets are very

impatient. If they don't see their

money, they move on to the next literary

thing in the room. They're not going to

wait 5 years for material revenue to pop

in. And I've shared this before. I'll

just go through it real briefly again.

Tam time the total addressable market on

earth for Tesla are far far higher than

the TAMs in space. That will change but

the total addressable market for Tesla

by 2032 is about 42 trillion. The total

addressable market for SpaceX by 2030 is

about 2.5 trillion. It's already going

to IPO at 1.8 trillion. Fairly valued.

Not much upside. However, the upside for

Tesla is massive. Huge. Insane. And all

of this stuff is going to unccork right

now as we speak. Well, give or take few

months, few years, etc. The 14

catalysts, the 14 lines of business, as

I call them. You got your EVs, your FSD,

your robot taxis, cyber cabs, humanoid

robots coming, we're going to see

version three hopefully in Q1. Energy

storage selling like hotcakes. Solar

energy, they're doubling down on that.

Global chargers, global gas stations all

over the planet. insurance software and

services battery production 4680 is now

has a dry cathode manufacturing tech

gigafactories cannot be replicated by

anybody will have incar inference now

for AI as well connected to guess what

SpaceX satellites so they can still have

their synergy without having to own them

uh they'll be building their custom

silicon they already do but look forward

to AI5 6 7 and 8 I think seven and eight

or six and seven will be ready for space

but that is years out my friends. Okay,

AI5 may not happen until next year. Then

we need AI 6, which would be the year

after. I know they want to be in 9 month

cycles, but you know, so much is needed.

And then Tesla Semi is going into scale

production as we speak. All very big.

Therefore, mathematically, SpaceX fairly

valued. You could argue overhyped. Tesla

undervalued because of all this goodness

coming our way real soon. And finally,

very important note, conglomerates trade

at a discount. If you are in capital

markets, you don't want a bad mixed bag

of stuff. You want very discreet

operations. You want maybe your space

and your AI and you want your robots and

your cyber cabs. Not necessarily one big

bag of everything. There will come a day

where it'll have to be a big bag of

everything, but not for the next three

to five years is my gambit. So let's get

to the conclusion my friends and this is

actually a relief. We do not want a

conglomerate. We want maximum value in

both separate entities. Not big

dilution. Look at the big Indian

conglomerates of Tada and all these

guys.

If they broke them all into little

pieces it'd be worth a lot more than the

conglomerate. But I want to talk very

importantly about what I call strategic

divergence.

Separation of these entities for now for

the next three to five years will allow

Tesla to focus on execution

execution for energy for mass m

manufacturing of cyber cabs and autonomy

and humanoid robotics. We're right

there. We're on the cusp.

We don't have to wait 5 years. The money

is right there. We can reach out and

touch it. But the SpaceX X entity needs

to do some crazy stuff. They need to

solve a lot of very technical problems

and it's going to take 3 to 5 years

before we start seeing material revenue

beyond what Starlink does today. Very

important. They are not the same. They

are at very different stages of the life

cycle. Okay. And finally, my three-year

outlook 3 to 5 years. No merger

imminent. It's too many barriers, too

complex. The standalone IPO will happen

and spacebased

data centers will happen too, but not

materially until nearly 2030. That is

the data, the facts of life. And my

conclusion, I'm the only one out there

that's saying this isn't going to

happen. I'm 85 95% sure it's not going

to happen because it doesn't make sense

right now. No merger serves the

shareholders of both entities. Okay? But

we don't want a conglomerate. A

standalone SpaceX IPO cleanly funds

their unique ambitions. They might get a

Department of Defense contract, an extra

50 billion in the bag, added to 50

billion from the IPO, $100 billion.

That's all they need. And Tesla needs to

focus on execution, execution,

execution. Elon has his comp plan, which

gets him to where he wants to be. And

spacebased data centers. Do not hold

your breath. 3 to 5 years out, my

friends. At the earliest. At the

earliest. and I'll bet my bottom dollar

on that. Hope you enjoyed the show. Big

thank you, Shauny, Cipher, Sniper, TND,

K8, and everybody else. And I'm sorry,

but the markets suck,

but you know, I've been saying it's

going to be a horrible early 2026 for a

long time now. Zeno, GQ Trader, Steo,

Cybertruck, Crypto, Tesla, and Buckhorn

as Tesla shareholders. We do not want a

conglomerate yet.

When Tesla gets to the stage where they

can ramp their silicone production and

Starship is cooked, getting stuff into

space for 100 kg or less, $100 per

kilogram or less, then we're good to go.

Then the synergy will create massive

free cash flow from both entities at the

same time. But now would be a bad time

for a marriage.

Hope you enjoy the show. See you

tomorrow. Bye.