SpaceX-Tesla Merger Would Create $3.4 Trillion Giant With Negative Profits, Analysts Warn

CNBC reported on May 27 that Tesla (TSLA) and SpaceX are in merger talks, a deal that would form a $3.4 trillion combined entity—yet recent financials show negative profits. Wedbush analyst Dan Ives estimates an 80% probability the tie-up happens, with SpaceX likely using its upcoming IPO shares to acquire the automaker. SpaceX, expected to debut in mid-June at a $1.75 trillion valuation, lost $4.94 billion last year. Tesla’s GAAP net income over four quarters was $3.9 billion, down sharply from $15 billion in 2023 and increasingly reliant on regulatory credits. Their combined annual earnings would be roughly minus $1 billion. Both face heavy AI infrastructure spending: SpaceX’s free cash flow deficit reached $14 billion in 2024, while Tesla plans up to $22.5 billion in capital expenditures over the next nine months. Analyst David Trainer called the merger a “suspended disbelief, squared” scenario, warning it would transfer Tesla’s overvaluation burden to SpaceX and require nearly $500 billion in future profits to justify current valuations.