A Tesla
Tesla
A Morgan Stanley analyst and Tesla bull teased a merger with  SpaceX.
Tesla  wouldn't gain any meaningful synergies from a tie-up  but  its  business would become more complicated.
Last year   Tesla  merged with struggling SolarCity  making Elon Musk CEO of both companies. The tie-up hasn't hurt  Tesla  in 2017 as the company's stock has surged above $300 per share and the combined enterprise hit a market capitalization of over $50 billion.
That doesn't mean it wasn't a terrible deal.  Tesla's balance sheet  instantly became loaded up with SolarCity debt  and what had been primarily a carmaker was suddenly responsible for rolling out a new solar roof product  at a time when  it  should have been all-hands-on-deck to launch the Model 3 mass-market vehicle.
The Model 3 is woefully behind schedule at this point  and although the solar roof is compelling  The Solar City side of  Tesla  business isn't any more coherent than it was a year ago.
Musk is also CEO of SpaceX  and last week Morgan Stanley analyst Adam Jonas teased a merger with  Tesla   arguing that such a deal would yield powerful synergies. The financial mechanics of how a  SpaceX-Tesla  merger would happen are both speculative and unclear; in July  SpaceX raised $350 million  bringing it valuation to $21 billion. An IPO has long been discussed.
But maybe Musk doesn't want to be running another public company. He's expressed some exasperation with playing that role at  Tesla   where investors have the carmaker under constant scrutiny and short sellers are always circling like sharks. SpaceX's mission is ultimately more ambitious than Tesla's — the whole go-to-Mars thing — and the company have been wowing the the space community by routinely launching and landing rockets.
 Tesla  doesn't have enough cash to buy SpaceX outright  so investors would have to accept a largely stock-based deal  and that might make sense to many of them: since  its  own 2010 IPO   Tesla  shares have returned over 1 ooo%  and several analysts have said that the stock hundreds of dollars of upside potential from  its  current level.
Unfortunately  a Tesla-SpaceX merger would raise a major issue: unlike SolarCity  the company wouldn't be shifting a massive amount of debt to  Tesla 's balance sheet  but it would be shifting monumental risk. Space is dauntingly expensive when everything is going right but ruinously costly when things go wrong. That's why governments  for the most part  have been the only ones aiming for large-scale goals in the final frontier.  Tesla-SpaceX  would expose  Tesla  to colossal losses at a time when  it 's already posting record negative earnings.
On the positive side   Tesla  would have access to  SpaceX 's goodwill with investors and  the company 's cash  around $1 billion. Nevertheless   Tesla  balance sheet would become almost incomprehensible  as auto  energy  and aerospace analysts all struggle to figure out what the diverse conglomerate — with a theoretical $70-billion market cap — is worth. It's already a challenge to independently value the car  energy  and solar businesses (the default position is to kick solar and energy down the road and rightly ascribe almost all of  Tesla 's value to cars).
If  Tesla  gains from a SpaceX merger   it  could be the deal of the decade. SpaceX investors would potentially receive a much fatter payout (if they think  Tesla  has tremendous long-terms prospects)  and Musk would be able to neatly avoid the pressure to handle two rounds of quarterly financial reporting and a whole new batch of prognosticators and short-sellers.
On the other hand  merging with SpaceX could yield almost zero synergies — the car business and the aerospace industry might look similar but they're actually radically different — and add so much risk and volatility to  Tesla  already risky and volatile business that  Tesla  shares could get hammered and  the company  would see  its  access to capital reduced at precisely the wrong time.
If I were betting  I'd say that  Tesla  and SpaceX actually will merge  perhaps against some heavy SpaceX investors complaints.  Tesla  got away with  it  on SolarCity  Musk detests being the CEO of a public company  and SpaceX is really his baby. And  Tesla  stock has become a super currency  opening up all manner of financial options.
Finally  the long stock-market rally that we've experienced in the aftermath of the financial crisis can last forever.  Tesla  got in early and has benefitted enormously. SpaceX might not be so lucky. The biggest risk to  the company  might be that despite its triumphs  it would be out there by itself nad subject to market forces that have nothing to do with its mission.
A merger with  Tesla  would save Musk from having to pull a SolarCity  Part Deux  and ride to rescue if SpaceX gets in trouble.
Get the latest  Tesla  stock price here.
A Morgan Stanley analyst and Tesla bull teased a merger with  [TGT]wouldn't gain any meaningful synergies from a tie-up  but  [TGT]  business would become more complicated.
Last year   [TGT]merged with struggling SolarCity  making Elon Musk CEO of both companies. The tie-up hasn't hurt  Tesla  in 2017 as the company's stock has surged above $300 per share and the combined enterprise hit a market capitalization of over $50 billion.
That doesn't mean it wasn't a terrible deal.  [TGT]'s balance sheet  instantly became loaded up with SolarCity debt  and what had been primarily a carmaker was suddenly responsible for rolling out a new solar roof product  at a time when  it  should have been all-hands-on-deck to launch the Model 3 mass-market vehicle.
The Model 3 is woefully behind schedule at this point  and although the solar roof is compelling  The Solar City side of  [TGT]business isn't any more coherent than [TGT] was a year ago.
Musk is also CEO of SpaceX  and last week Morgan Stanley analyst Adam Jonas teased a merger with  [TGT]arguing that such a deal would yield powerful synergies. The financial mechanics of how a  SpaceX-Tesla  merger would happen are both speculative and unclear; in July  SpaceX raised $350 million  bringing it valuation to $21 billion. An IPO has long been discussed.
But maybe Musk doesn't want to be running another public company. He's expressed some exasperation with playing that role at  Tesla   where investors have the carmaker under constant scrutiny and short sellers are always circling like sharks. SpaceX's mission is ultimately more ambitious than Tesla's — the whole go-to-Mars thing — and the company have been wowing the the space community by routinely launching and landing rockets.
 [TGT]doesn't have enough cash to buy SpaceX outright  so investors would have to accept a largely stock-based deal  and that might make sense to many of them: since  [TGT]  own 2010 IPO   Tesla  shares have returned over 1 ooo%  and several analysts have said that the stock hundreds of dollars of upside potential from  its  current level.
Unfortunately  a Tesla-SpaceX merger would raise a major issue: unlike SolarCity  the company wouldn't be shifting a massive amount of debt to  Tesla 's balance sheet  but it would be shifting monumental risk. Space is dauntingly expensive when everything is going right but ruinously costly when things go wrong. That's why governments  for the most part  have been the only ones aiming for large-scale goals in the final frontier.  [TGT]would expose  Tesla  to colossal losses at a time when  [TGT] 's already posting record negative earnings.
On the positive side   [TGT]would have access to  SpaceX 's goodwill with investors and  the company 's cash  around $1 billion. Nevertheless   [TGT]balance sheet would become almost incomprehensible  as auto  energy  and aerospace analysts all struggle to figure out what the diverse conglomerate — with a theoretical $70-billion market cap — is worth. It's already a challenge to independently value the car  energy  and solar businesses (the default position is to kick solar and energy down the road and rightly ascribe almost all of  [TGT] 's value to cars).
If [TGT][TGT]  could be the deal of the decade. SpaceX investors would potentially receive a much fatter payout (if they think  [TGT]has tremendous long-terms prospects)  and Musk would be able to neatly avoid the pressure to handle two rounds of quarterly financial reporting and a whole new batch of prognosticators and short-sellers.
On the other hand  merging with SpaceX could yield almost zero synergies — the car business and the aerospace industry might look similar but they're actually radically different — and add so much risk and volatility to  [TGT]already risky and volatile business that  [TGT]shares could get hammered and  the company  would see  [TGT]  access to capital reduced at precisely the wrong time.
If I were betting  I'd say that  [TGT]and SpaceX actually will merge  perhaps against some heavy SpaceX investors complaints.  [TGT]got away with  [TGT]  on SolarCity  Musk detests being the CEO of a public company  and SpaceX is really his baby. And  [TGT]stock has become a super currency  opening up all manner of financial options.
Finally  the long stock-market rally that we've experienced in the aftermath of the financial crisis can last forever.  [TGT]got in early and has benefitted enormously. SpaceX might not be so lucky. The biggest risk to  [TGT]might be that despite [TGT] triumphs  it would be out there by [TGT] nad subject to market forces that have nothing to do with [TGT] mission.
A merger with  [TGT]would save Musk from having to pull a SolarCity  Part Deux  and ride to rescue if SpaceX gets in trouble.
Get the latest  [TGT]stock price here.