Tesla investors are waiting for a merger with SpaceX. Better hope they're patient.
Investors, along with Wall Street analysts and Barron's, believe a Tesla-SpaceX merger is a fait accompli. Both are all about AI. Both are run by Elon Musk. And both work closely together on AI hardware and applications.
"It's a valid question," Morgan Stanley's Adam Jonas told CNBC on Wednesday, adding there are good legal reasons to have both of Musk's companies under one roof.
To be sure, though, there's no guarantee of a merger.
"We believe a potential SpaceX-Tesla merger is complicated by significant cash burn at both companies and meaningful regulatory risks, " wrote James Picariello, of BNP Paribas.
SpaceX needs hundreds of billions in fresh capital to build its orbital AI satellite constellation. Tesla is ramping up its spending on robots and robo-taxis. Tesla's free cash flow is expected to be negative both this year and next.
"Meanwhile, the need for multi-jurisdiction approvals (involving Defense work) and Tesla shareholder support suggests any deal will take time, in our view," added Picariello. "We stick to our guns with a reiterated Underperform recommendation and $280 price target."
Merger speculation didn't support the stock on Wednesday. In midday trading, shares were down 2.7% $392.01. The S&P 500 and Dow Jones Industrial Average were down 0.8% and 1.5%, respectively. Tesla's move followed a 4% dip on Tuesday.
Word that Tesla produced a new version of its Model Y crossover in Texas failed to give shares a jolt. The EV maker now offers a three-row, six-seat version of its Model Y, called the Model Y L, with L for long wheelbase.
L production seems to be the manufacturing news that Vice President Lars Moravy teased this past week. Tesla didn't respond to a request for comment.
The launch version starts at about $62,000, or about $4,000 more than the performance version of the Model Y. The base version of the Y starts at $39,000.
New car versions are typically good for sales, and the decision to sell the L in the U.S., which was launched in China, might give Tesla a sales boost.
Tesla is coming off a great quarter for sales. It sold about 480,000 vehicles in the second quarter, roughly 70,000 more than Wall Street projected and up 25% year over year. Still, shares are down since the delivery report and remain off about 10% this year.
Investors just aren't that focused on car sales right now. Along with SpaceX, they are thinking about AI.
Tesla launched an AI-trained robo-taxi service in Austin, Texas, about a year ago. Now it operates in three states. Investors are waiting for the business to start generating noticeable sales and earnings.
They're also waiting for updates about Tesla's AI-trained humanoid robot, Optimus. The company is working on the third version of its labor-saving bot.
Robo-taxis and robots will move the stock more than EVs in the coming months.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 08, 2026 11:15 ET (15:15 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments