Elon Musk has reportedly discussed merging Tesla Inc. (NASDAQ:TSLA) with SpaceX, and prediction market traders are now betting the deal closes by next year.

The question for Tesla shareholders is what that would do to their stock.

The Bear Case: A 28% Haircut

Gary Black of The Future Fund estimates a deal could be 28% dilutive to existing Tesla holders, with the combined entity trading closer to $2.25 trillion than $3 trillion.

“Institutional investors I know hate the idea of a TSLA-SPCX combo because of the dilution,” Black wrote on X. “Investors prefer pure plays, and not conglomerates, which nearly always gravitate to the lowest common multiple.”

The Bull Case: A $450 Billion Reprice

Tesla retail shareholder advocate Alexandra Merz argues a true merger-of-equals would reprice the lower-valued side upward, potentially adding $450 billion to Tesla’s valuation.

Longtime Tesla investor Ross Gerber has called the combined company a potential “Berkshire Hathaway of AI, arguing the two businesses are so intertwined that combining them “just makes the most sense.”

Kalshi Odds Just Crossed 55%

The Kalshi contract on a Tesla and SpaceX merger being announced before May 2027 is trading at 55%, up from around 26% earlier this year.

The line moved after CNBC reported Musk has been discussing a combination with close colleagues.

Wedbush analyst Dan Ives puts the odds of a merger at 80% to 90% by the first half of 2027, and Musk biographer Walter Isaacson has pointed in the same direction.

The Cap Tables Are Already Bleeding Together

The merger may also be further along than it looks.

Tesla invested $2 billion in xAI earlier this year, and when SpaceX absorbed xAI months later, that stake automatically converted into SpaceX equity. Tesla is already a SpaceX shareholder.

The two companies are increasingly running like divisions of the same conglomerate. Terafab, their joint semiconductor plant on the Giga Texas campus, is being built to produce chips for both Tesla’s AI ambitions and SpaceX satellites.

SpaceX has spent roughly $890 million on Tesla products, including Megapack batteries powering xAI data centers and a fleet of Cybertrucks.

SpaceX is expected to begin trading on the Nasdaq in mid-June under the ticker SPCX, targeting a valuation of $1.75 trillion to $1.8 trillion.

That tops Tesla’s roughly $1.6 trillion market cap, meaning SpaceX would likely be the larger party in any swap.

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