Tesla Stock Rises Amid Merger Rumors With SpaceX

• Tesla stock rose on Thursday after reports of a SpaceX merger.
• The company is considering selling China operations to make the deal possible.
• The merger would create one of the biggest companies in the US.

Tesla stock rose on Thursday as U.S. equity markets recovered and investors assessed reports about a possible merger with SpaceX.

TSLA climbed toward $308 during regular trading before extending its gains to approximately $313 in after-hours activity.

The advance followed a Wall Street Journal report that Tesla had considered separating its China operations to reduce obstacles to a potential SpaceX combination.

However, Elon Musk rejected the report on Friday, July 31. He described the claim that Tesla was considering selling its China operations as “absurdly fake news.”

Rumors that Elon Musk, the world’s richest person, would consider merging his two biggest companies have been around for a few months.

Now, there are signs that Musk will attempt to combine the two firms, a move that would create one of the world’s largest firms. Tesla has a market capitalization of $1.22 trillio, while SpaceX is valued at $1.47 trillion.

According to the Wall Street Journal, Musk is planning to spin off Tesla’s China operations into a separate company to make this deal possible. Musk has told his executives to also consider a sale of the business or even closure. A sale, potentially to local Chinese investors, would be possible, while closing the business would lead to a substantial loss for the company.

The challenge, however, is that these options will have a direct impact on Tesla’s business, which counts China as the second-biggest market after the US. It would leave the company depending on the US and Europe.

Most notably, a merger would also cost long-term Tesla investors, who have seen the stock drop from nearly $500 earlier this year to where it is today. Unless Tesla asks for a higher stock price, these investors will incur a loss. These investors, however, would have little power because of Musk’s stakes in the two companies.

For a merger deal to conclude, Tesla would need to separate its Chinese business because SpaceX is a major defense contractor in the US. As such, the deal would aim to create a firewall between Tesla’s Chinese subsidiary and its US business.

The potential merger between Tesla and SpaceX comes at a time when Elon Musk is aiming to consolidate his businesses around artificial intelligence.

For example, in 2025, he merged X (Twitter) with xAI, which owns Grok. After that, he merged xAI with SpaceX earlier this year. As such, while SpaceX is a space-related company, it is also a big player in the social media and AI businesses.

Most notably, Musk also launched Terafab, a large semiconductor project in Texas. Terafab, which will eventually cost over $100 billion, is being developed by SpaceX and Tesla. In its recent results, Tesla said that it will generate a negative free cash flow because of this investment.

Tesla is also investing heavily in robotics and AI tools. It is building Optimus, its robots that are expected to start selling in the coming months. He is also working to improve Full Self-Driving (FSD) features.

The main challenge for a Tesla and SpaceX merger is that it would create a conglomerate. This is an issue, considering that many companies are going in the opposite direction, separating themselves to create more efficient firms.

For example, General Electric separated its business into three companies: GE Aerospace, GE Healthcare, and GE Vernova. Western Digital also created SanDisk. All these spin-offs have done well since the separation.

The daily chart showed Tesla stock remaining inside a wider downward trend. The decline intensified after the company’s second-quarter earnings report.

Tesla stock found support near $296 before recovering toward $308 during Thursday’s regular session.

The SpaceX merger report contributed to the rebound, although the broader market recovery also supported TSLA.

Tesla remained below its major moving averages and former support near $337. That level marked an earlier April low before becoming resistance after the latest decline.

The stock also left a downside gap after earnings. Tesla could attempt to fill part of that gap if buying momentum continues. The first major resistance sits near $337.

A sustained move above that level could expose the moving-average region and improve the short-term technical structure.

However, failure to clear $337 could attract renewed selling.

A break below $296 would weaken the rebound and return attention to the psychological support near $250.

The merger narrative could continue driving short-term volatility.

However, Tesla and SpaceX have not confirmed a transaction, while Musk has denied the report that Tesla may sell its China operations.

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