tesla (NASDAQ:TSLA) inventory rose on Friday (January 30) following experiences of a potential merger with Elon Musk’s reusable rocket firm. Fascinating prospect, however ought to buyers be cautious?
It might not occur. But when that occurs, there are some things Tesla shareholders ought to remember when evaluating the attractiveness of a merger with SpaceX.
Who will get what?
As a enterprise, I a lot favor SpaceX to Tesla. So I feel it is smart for automotive, robotaxi, and humanoid robotic corporations to see their inventory costs rise on information of a possible merger.
It additionally reveals {that a} mixture of the 2 corporations is clearly enticing to SpaceX buyers. The corporate had been contemplating going public this 12 months, which may put it aside on IPO charges.
Nevertheless, an apparent query mark considerations who will finally personal what within the mixed firm. One concept is perhaps to separate alongside the newest market value.
This can give Tesla shareholders a 63% stake within the firm. Whereas this seems like a very good deal, it may have undesirable penalties given the CEO’s newest compensation bundle.
CEO compensation
In November 2025, Tesla shareholders voted to approve Elon Musk’s new compensation plan. Nevertheless, the merger with SpaceX will elevate some necessary questions on this regard.
A lot of the bundle has to do with the CEO growing Tesla’s market worth. Merging with an $800 billion firm may accomplish this.
But when the brand new enterprise had been break up up based mostly on every enterprise’s market worth, Tesla inventory would not be price any extra. As the corporate grows, the variety of shareholders will enhance accordingly.
In different phrases, the CEO will get nearer to a milestone in his compensation bundle, however Tesla shareholders will not get the advantages they imagined. And it is price noting.
What’s going to occur?
For apparent causes, not one of the operational milestones within the paid bundle are instantly associated to SpaceX. They’re related to vehicles, self-driving vehicles, humanoid robots, and extra.
Nevertheless, a few of them shall be instantly affected by the merger. A lot of that has to do with assembly particular EBITDA targets, which SpaceX will doubtless contribute to.
The plain resolution could be to draft a brand new compensation bundle that displays the brand new circumstances. Nevertheless, it’s extremely uncommon to take action with the present proposal, which was authorized lower than three months in the past.
I am undecided what I feel is one of the simplest ways ahead on this state of affairs. Nevertheless, I consider that Tesla shareholders have to control how issues develop.
final silly thought
There is a good likelihood this shall be a waste, however this is not the primary time one thing like this has come up. But when that occurs, Tesla shareholders might want to think twice in regards to the potential affect.
A merger with Tesla would give SpaceX a less expensive path to market than a conventional IPO. And that is why buyers within the firm have an interest.
Tesla shareholders might imagine they stand to profit. But when a deal does occur, I feel the true winner could also be Elon Musk.