SpaceX and Tesla form committees to explore a possible merger

what happened

According to Stocktwits, SpaceX and Tesla have set up special committees of independent directors to explore a possible combination. Elon Musk, who leads both companies, said this on Tuesday during the third-quarter earnings call. He said the committees were created at shareholders' request and that he is excluded from the talks because of his role at both firms.

Musk warned against assuming a deal is inevitable, calling that view an overstatement. He personally sees a combination as a good idea, but stressed that Tesla approval would need a majority of all outstanding shares, not just of votes cast. The committees have not agreed on terms, and there is no guarantee they will.

SpaceX reported revenue of $14.58 billion against an estimated $13 billion, and earnings of $0.35 a share versus $0.13 expected. Backlog stood at $63 billion, of which $42 billion is expected to convert within a year. After hours, SPCX shares rose 8% and TSLA gained 2%.

why it matters

Two things matter for markets: a possible deal between Musk's two companies and a strong SpaceX quarter, in which its superintelligence segment outpaced Starlink in revenue for the first time. The approval bar for Tesla shareholders is high, and no merger is currently on the agenda for the December 3 shareholder meeting.

market impact

SPCX and TSLA: a possible deal and the strong report drive volatility in both stocks

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