SpaceX-Tesla tie-up would create $3.4 trillion company, Fortune says
A Fortune analysis says a hypothetical combination of Elon Musk’s two companies would be the largest merger ever but would post a GAAP loss.
By Sofia Marchetti · World Affairs Correspondent
2 min read
A hypothetical merger of SpaceX and Tesla would create a company valued at about $3.4 trillion, according to a Fortune analysis. The same analysis said the combined business would still lose money on a GAAP basis, highlighting the gap between market value and current earnings.
Fortune’s Shawn Tully wrote that such a deal would rank as the largest merger of all time. The scale would come from pairing two companies with valuations that Fortune described as roughly equal: Tesla at $1.65 trillion and SpaceX at an anticipated IPO valuation of $1.75 trillion.
The share math behind the deal
According to Fortune, SpaceX would have to issue a large amount of new stock to complete a transaction with Tesla. Tully calculated that the new shares would equal 94% of SpaceX’s existing share count.
That issuance would nearly double SpaceX’s shares outstanding, Fortune reported. The count would rise from 4.1 billion shares to about 8 billion shares, based on Tully’s analysis.
Using those figures, the merged SpaceX-Tesla entity would carry a valuation of $3.4 trillion, Fortune said. That figure would place the combined company among the most valuable corporate entities in the world by market value, based on the valuations cited in the analysis.
Big valuation, negative earnings
The profit picture would look far smaller than the valuation, according to Fortune. Tully wrote that recent results imply the combined company would show annual GAAP earnings of roughly negative $1 billion.
GAAP earnings refer to profit measured under generally accepted accounting principles. Fortune’s analysis said that, on that basis and using current numbers, the pro-forma company would not be profitable.
The contrast is the central point of the calculation. Fortune’s figures show that combining Tesla and SpaceX would produce a company with a multitrillion-dollar valuation while still leaving investors with a business posting a yearly accounting loss.
A Musk-centered thought experiment
The analysis centers on two companies closely associated with Elon Musk. Musk is Tesla’s chief executive, and SpaceX’s anticipated public-market valuation was central to Fortune’s merger calculation.
Fortune framed the combination as a hypothetical union rather than a completed transaction. The numbers in Tully’s analysis depend on Tesla’s cited valuation, SpaceX’s expected IPO valuation and the assumed share issuance needed to make the deal work.
The result, according to Fortune, is a merger scenario that would be historic in size but not in profitability. At the figures cited, the combined company would be valued at $3.4 trillion and would show GAAP annual earnings of about minus $1 billion.
This story draws on original reporting from Fortune.