Constellation Research founder Ray Wang said on Wednesday that merging SpaceX and Tesla would help Elon Musk achieve Musk's technology goals. Wang said in a CNBC interview that he expected such a transaction to happen. Wang identified substantial synergies between the companies' work on self-driving systems, battery technology and other areas. Constellation Research is based in Silicon Valley.
Wang cited SpaceX's dual-class share structure as the reason Musk wanted SpaceX to serve as the merger vehicle. Musk controls more than 80% of SpaceX's voting rights. Wang projected that Musk would own 37% of the combined company's equity and control 56% of voting rights after a merger. Wang said Tesla shareholders might receive 0.7 SpaceX shares for every Tesla share. Wang argued that those terms would let Musk regain control of the companies and achieve the engineering synergies Musk seeks.
Wang said major SpaceX investors, including Saudi Arabia's sovereign wealth fund PIF, should support a merger. Wang said, "Almost everything that Elon Musk touches gives you 10x scale, 100x scale, 1000x scale." Wang added that investments in Musk's companies give PIF early access to future technologies, including moon-based factories and brain-computer interface implants from companies such as Neuralink.
Wang identified possible lawsuits from Tesla bears as a potential obstacle to a merger. Wang described those investors as having continued to lose money betting against Musk. Wang also identified future compute contracts for Tesla and SpaceX as a challenge. Wang said bringing engineers and other participants together around a shared development roadmap would present another challenge.
Wang set a $300 price target for SpaceX as demand for SpaceX's compute increases. That target could represent around 90% upside from SpaceX's share price of about $155 in Thursday's premarket trading. Wang identified telecommunications as the source of SpaceX's long-term upside. Wang predicted that SpaceX's communications business would reduce margins at some of the world's largest telecommunications companies.
Wang said Musk's companies pursue low costs, citing Tesla's Robotaxi. Wang said the Robotaxi was designed for "the lowest cost per mile kilometer that there is in the market". Wang said the two-seat design, operating expenses and manufacturing costs give Tesla engineered cost advantages throughout the value chain.
The unveiling of Tesla's Roadster, which uses cold gas thruster technology sourced from SpaceX to hover, reinforced speculation about a merger. Investor Ross Gerber said ahead of Tesla's earnings report that now would be the time for a merger if a merger were to happen. Gary Black of The Future Fund LLC said SpaceX could offer $420 per Tesla share in a stock-for-stock transaction. However, Black warned that a merger could raise dilution concerns for Tesla shareholders.
Analyst Predicts SpaceX-Tesla Merger Could Boost Elon Musk's Control and Synergies
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Summary
Ray Wang of Constellation Research told CNBC a SpaceX-Tesla merger could boost Elon Musk's control and tech goals via self-driving and battery synergies. Musk would own 56% voting rights in the merged firm, with 0.7 SpaceX shares per Tesla share. The move could impact liquidity and crypto markets, especially with MiCA regulations looming in the EU. Wang also warned of legal risks and compute contract issues ahead.
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