Elon Musk said that merging SpaceX and Tesla is an interesting idea after SpaceX reported its first quarterly net profit since listing on the stock market, driven mainly by its AI processing power rental business. However, independent boards of both companies have yet to reach a conclusion on the merger terms.
Elon Musk, CEO of SpaceX and Tesla, revealed that he supports the idea of merging the two companies, describing it as beneficial. However, the decision depends on each company's special committee, composed of independent directors established at shareholders' request.
Musk stated he cannot participate in the discussions due to conflicts of interest, warning that the merger should not be considered certain since both parties have not agreed on transaction terms and may fail to reach an agreement. Additionally, the merger requires approval by Tesla's shareholders with a majority of all shares, which Musk noted is a challenging condition.
This development follows SpaceX reporting a $4.4 billion net profit in Q3, from July to September, compared to a $1.1 billion loss in the same period last year. Revenue rose 161% to $14.6 billion, exceeding analysts' expectations.
The AI business is the main growth driver, generating about $7.6 billion in revenue—nearly a tenfold increase from the previous year—becoming the company's largest revenue source, surpassing the Starlink satellite internet service. This income comes from renting processing power to AI companies, including data center agreements with Anthropic and Google, expanding the Grok chatbot service, and acquiring the startup Cursor, which develops AI-assisted coding tools.
However, SpaceX continues heavy investment, spending $19.6 billion in the quarter, with $16.4 billion allocated to AI. The company reported processing capacity increased to 1.7 gigawatts from 0.6 gigawatts last year, and Musk expects to add another 10 gigawatts by 2027.
Meanwhile, Starlink revenue rose 69% to $5.2 billion, serving 13.6 million users, surpassing analyst expectations. However, average revenue per user per month declined to $69 from $83 last year due to market expansion and offering lower-priced packages.
The Starship rocket, central to plans for human Mars missions and mass satellite launches, conducted its first revenue-generating commercial flight, deploying 26 new Starlink satellites into orbit. Musk noted that the two companies have further collaboration opportunities in AI software, chip design, robotics, and space-based data processing systems.
After Musk's comments on the merger, SpaceX shares rose up to about 8% in after-hours trading, while Tesla shares increased 1.8% during the same period.
SpaceX began trading on the Nasdaq on 12 Jun 2023 GMT+7, following its initial public offering at $135 per share, raising approximately $85.7 billion. However, its Q2 earnings—the first report after going public—showed $7.8 billion in revenue and a net loss of $541 million before turning profitable in the latest quarter.
Reports indicate merger talks started in recent weeks and could lead to SpaceX acquiring Tesla, though no official conclusion exists yet. As of 30 June, Musk owned about 48.4% of SpaceX and controlled over 82% voting rights through special shares, while holding roughly 20% of Tesla shares.
Musk also projected that SpaceX could generate annual recurring revenue between $500 billion and $1 trillion by the end of 2027, driven by rising AI processing demand, while the company's CFO expects Q4 capital expenditures to be between $35 billion and $40 billion.
Additionally, the company plans to advance the Terafab project—a chip manufacturing joint venture between SpaceX and Tesla—aiming to produce initial test chips by May or June 2027 and begin mass production in Q3 2028.
SpaceX still needs to demonstrate reliable reuse of its Starship rockets and consistent commercial service, as this technology is crucial for expanding the Starlink satellite network and developing long-term space-based AI processing infrastructure.
,Reuters/ AFP