I am on the wrong side of a merger that has not happened

The mirror

Musk owns roughly 20% of Tesla. Through special voting shares he controls roughly 85% of SpaceX.[M-03] My account is 91% Tesla and 9% SpaceX.

Sit with those two sentences next to each other. His exposure and mine are close to mirror images. If those two companies ever combine, and if value moves in the direction his ownership would favour, then the overwhelming majority of my account is the source of that movement and a rounding error is the destination. I would be funding my own smaller position.

That is not an accusation. It is arithmetic about incentives, and it holds whether or not anyone behaves badly.

Why the question will not go away

The reason this is not idle speculation is that the two companies already share a balance sheet in practice. None of the following is a merger. All of it has already happened.

Terafab is the one I keep coming back to. It is a $25 billion chip plant announced in March 21, 2026, shared between Tesla, SpaceX and xAI, targeting a 2 nm process.[M-06] And 80% of its compute output is earmarked for space-based orbital AI satellites, with 20% for everything on the ground.[M-06]

Tesla is a funding partner in a factory built mostly to serve SpaceX’s roadmap. You do not need a merger agreement for capital to flow from one company to the other. That part is already happening, in public, with a press release.

Add the rest of it. SpaceX absorbed xAI outright in February, so it has done a merger of this kind, recently, at enormous scale.[M-09] Tesla holds about $2 billion of SpaceX stock. On the day SpaceX listed, its own president said a merger “might make Elon Musk’s life a little easier.”[M-04] And on the July call Musk did not deny anything; he said there is “more and more overlap.”[M-01]

What the objection actually is

The serious criticism is not that a combined company would be a bad business. It is about who would be able to say no to anything afterwards.

• Musk would be negotiating both sides. His record on that includes the SolarCity deal and the Twitter acquisition.[M-03]
• SpaceX’s governance lacks independent director requirements and mandates arbitration for shareholder disputes. Columbia’s Michael Ewens describes the result as “weaker mechanisms for minority shareholders to push back.”[M-03]
• An acquisition of Tesla at a $2 trillion or greater valuation would, per Ewens, trigger additional share issuance under Musk’s pay package, diluting everyone else further.[M-03] A separate analysis argues a merger could trip the roughly $1 trillion package automatically.[M-05]
• The likely structure uses expensive SpaceX stock as the currency to buy a company whose EV sales have been shrinking for three years.[M-03] Which direction that trade favours depends entirely on a ratio nobody has published.

How likely is any of it

Prediction markets have put a formal announcement in 2026 somewhere around 17 to 26%.[M-08] I want to be careful with that number in both directions. It is not nothing, and a one-in-five chance of the single largest change possible to my account is worth a page. It is also not a forecast that it happens. The favourite, by a wide margin, remains that nothing is announced at all.

The case I am arguing against myself

I should give the other side properly, because I think it is stronger than the sceptics allow.

The industrial logic is genuine. Optimus, orbital compute and autonomy are converging on the same engineering problem, which is inference per watt. Terafab exists because three companies wanted the same silicon and could not each build a fab. One combined company would have one capital allocator instead of three entities negotiating with each other at arm’s length while sharing a chief executive and, in at least one case, a vice president.[M-02]

And there is an uncomfortable point for my own argument. In my note on SPCX I wrote that the sell-side values SpaceX near $231 a share while Morningstar’s model says $62. If the optimists are closer to right, then being pulled into SpaceX is not obviously a loss for a Tesla holder. Being on the wrong side of an ownership asymmetry is not the same thing as being wrong about the outcome. Those get conflated constantly and I do not want to do it here.

The terms I would want, written before there is a deal

It is easy to have opinions about a transaction after you have seen the price. Here is what I would want to see, recorded now, while there is nothing to be emotional about.

• Independent committees on both sides, not boards that answer to the same person.
• A fairness opinion from a bank with no other mandate from either company.
• The exchange ratio anchored to something external, rather than negotiated by a person sitting on both sides of the table.
• Any pay-package trigger disclosed in full and voted on separately from the merger itself.
• Minority protections that survive the combination, including no forced arbitration for shareholder disputes.

If a deal is announced without most of those, I said in advance that I would not like it, and this page is the receipt.

What I am actually doing about it

Nothing, and I would rather say that plainly than dress it up. I cannot hedge a one-in-five probability with a monthly transfer, and I am not going to sell a position I believe in over a deal that does not exist. What I can do is stop pretending my 91 and my 9 are two separate bets. They already share a chief executive, a chip plant, an equity stake and a supplier list. The merger question is not what would make them one position. It would only be the paperwork admitting they already are.

The disclosure

None of this is advice. I am seventeen, it is a Fidelity Youth Account, I place the trades myself, and I hold both companies discussed here. To repeat the thing at the top, because it is the part most likely to be misread: no merger has been announced, and this post is analysis of a possibility rather than a report of an event.

Sources

1. [M-01]Musk says Tesla and SpaceX “can't talk about” merging on the earnings call, but notes “more and more overlap”
2. [M-02]Will SpaceX buy Tesla? Musk is not revealing his plans
3. [M-03]Why a merger with SpaceX could be bad for Tesla shareholders: ~20% vs ~85% ownership, forced arbitration, dilution
4. [M-04]SpaceX's president hints at a Tesla merger post-IPO
5. [M-05]A SpaceX/Tesla merger could trigger Musk's $1T pay package automatically
6. [M-06]Terafab: the $25B Tesla, SpaceX and xAI chip plant, and its 80/20 output split
7. [M-07]Electrek's more sceptical read of the same Terafab announcement
8. [M-08]Prediction market on a formal merger announcement being made in 2026
9. [M-09]The SpaceX and xAI all-stock merger, valuing the combined company at $1.25T

WRITTEN 2026-08-03. OWNERSHIP PERCENTAGES AND ODDS ARE AS REPORTED AT THAT DATE AND WILL MOVE. THE HEADLINE FACT WILL NOT: AS OF PUBLICATION, NO MERGER EXISTS.