I Wouldn't Buy Tesla Stock Betting on a SpaceX Deal. Here's Why.

Tesla and SpaceX boards have established special committees to evaluate a potential merger, with SpaceX valued at $2 trillion versus Tesla's $1.5 trillion. While SpaceX is growing significantly faster (161% revenue growth vs. Tesla's flat growth), the analyst argues a deal at current market prices would be unfavorable for Tesla shareholders. Tesla shareholders would own only 43% of a combined company while taking on SpaceX's massive capital spending ($48.1 billion vs. Tesla's $13 billion), resulting in negative free cash flow of $35 billion for SpaceX. The valuation math also doesn't improve for Tesla investors, as the combined company would trade at higher multiples than Tesla alone.