Musk Pitches Tesla-SpaceX Merger as Backdoor Into S&P 500
TSLA sits 30% above its 52-week low of $297.38.
Summary
Musk is pushing a Tesla-SpaceX tie-up partly as a way to get SpaceX into the S&P 500 after S&P Dow Jones Indices declined to change its rules for megacap IPOs. People familiar say a deal could be announced as soon as next month, following the special committees both companies formed to explore a merger disclosed on SpaceX's October earnings call. TD Securities' Reid Noch estimates index funds could generate about $100 billion of demand for the combined stock; based on Friday's prices the two carry a combined value of nearly $3.5 trillion, which would rank fifth in the index. The catch: inclusion is not guaranteed, and if the combined company is excluded, passive funds would have to sell the shares they receive. Tesla is the more directly affected ticker — it is the S&P 500 member whose slot and 180x forward multiple are in play — while SpaceX is the larger, private-side party. Watch for a deal announcement as soon as next month.
At the time of this announcement, TSLA was trading at $387.11 on NASDAQ in the Energy & Transportation sector, with a market capitalization of approximately $1.5T. The 52-week trading range was $297.38 to $498.83. This news item was assessed with positive market sentiment and an importance score of 8 out of 10. Source: Mint.