Walter Isaacson thinks Elon Musk‘s two biggest companies are headed for a deal.

The Musk biographer said this week that a merger between Tesla Inc. (NASDAQ:TSLA) and Space Exploration Technologies Corp. (NASDAQ:SPCX) is coming, and prediction market traders are leaning the same way.

“I think there will be a Tesla-SpaceX merger buyout, because it makes sense,” Isaacson told CNBC this morning, days after SpaceX’s record public debut.

Why Isaacson Sees A Deal

Both companies build physical products driven by artificial intelligence, and Isaacson said tracking which engineers work across two separate companies does not make much sense.

That shuffling carries legal weight. A Delaware shareholder suit alleges Musk siphoned AI talent and Nvidia chips from Tesla to feed xAI, the startup now folded into SpaceX, and a merger could clean up the governance gray area those moves created.

Isaacson also gave the punchiest read on why Musk never cashes out, saying he treats his trillion-dollar net worth less like personal wealth than like points piled up by an avatar in a video game, capital to be redeployed inside his companies.

What The Market Is Pricing

Kalshi traders put the odds of a Tesla and SpaceX combination by May 2027 at roughly 57%, up from 52% earlier in the month. The contract resolves yes whether Tesla buys SpaceX, SpaceX buys Tesla, or the two combine under common ownership.

Who would buy whom is unsettled. SpaceX is now worth about $2.182 trillion against Tesla’s $1.5 trillion, which on size alone makes the rocket company the likelier acquirer. SpaceX also posts losses while Tesla turns a profit, a wrinkle that may complicate how the shares get valued in a swap.

Why It Matters For TSLA

The impact on TSLA depends on how a deal is structured. Gary Black of The Future Fund estimates a combination could be 28% dilutive to Tesla holders, with the merged company trading at a conglomerate discount near $2.25 trillion rather than $3 trillion.

Alexandra Merz, a Tesla shareholder advocate, sees the reverse under a merger of equals, a structure she argues would reprice the cheaper stock upward and add about $450 billion to Tesla’s value. Longtime investor Ross Gerber has likened the combined company to a Berkshire Hathaway of AI.

The divide comes down to the swap ratio, and as the smaller company, Tesla carries most of that risk.

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