Tesla investors might not want to bank on a merger with Elon Musk's other trillion-dollar company, SpaceX, to generate returns. It might not happen.
Fading M&A hype is a risk to Tesla stock. So are the midterm elections.
More than a few Wall Street analysts and investors believe a Tesla-SpaceX merger is Musk's endgame, creating the ultimate company for the 21st century, with frontier AI models, hardware, and applications that range from digital assistants to AI-trained humanoid robots.
The current consensus appears to be that 12 to 18 months is a reasonable timeline. That's not long on Wall Street. Stocks always trade on forward outlooks, and analyst price targets are typically what can be achieved in the coming year.
That timeline might be too aggressive, says Future Fund Active ETF co-founder Gary Black. "Those who think SpaceX will buy Tesla don't understand the concept of board fiduciary duty," he said on Thursday. Musk has more than 80% of SpaceX voting control, but "that doesn't magically let the SpaceX board off the fiduciary hook." The board still has to do what's best for all shareholders.
There are other reasons to hit the pause button on M&A hype, says GLJ Research analyst Gordon Johnson. Any deal would likely take years to complete and require approval from governments around the world, including China, he says. "This could take two to three years."
Johnson sees $40 to $50, or roughly 10%, of risk to Tesla stock as M&A hopes wane. The nearer-term issue investors should focus on is the midterm elections, he adds. Odds that the Democrats retake the House of Representatives are north of 80% on prediction market website Kalshi.
"I think Musk will be investigated," Johnson adds, which can create a distraction for Tesla investors.
To be sure, Johnson is a Tesla bear, rating shares Sell. His price target for Tesla stock is below $30. And Black, a longtime Tesla shareholder, doesn't own Tesla stock right now.
The average analyst price target for Tesla shares is about $407, according to FactSet. There isn't much for a SpaceX takeover in that number.
What is in analyst models is AI advancement. Tesla stock, which trades for about 173 times earnings expected over the coming 12 months, hinges on AI. Investors want to see progress on the company's AI-trained robo-taxi business and humanoid robots.
Tesla launched a robo-taxi service in Austin, Texas in June 2025 (with shares at about $322). Expansion has been slow. Tesla is also working on its humanoid robot, Optimus, but investors still don't know when robots could meaningfully contribute to sales and earnings.
Investors will hear from Musk on both topics when Tesla reports second-quarter earnings on July 22.
Tesla stock was down 1.6% in premarket trading at $384.82, while S&P 500 and Dow Jones Industrial Average futures were off 0.8% and 0.4%, respectively.
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