Tesla and SpaceX are moving toward a possible historic combination, as stronger-than-expected Tesla earnings and a Barclays upgrade pushed TSLA shares more than 5% higher on Monday.
Tesla reported adjusted earnings per share of $0.48 for the third quarter, above Wall Street forecasts of roughly $0.43. Revenue reached about $28.05 billion, edging past LSEG estimates of $27.88 billion. Free cash flow swung to a positive $1.5 billion, a sharp improvement from the cash outflow many analysts had expected. Vehicle deliveries slipped 2% to 486,532 units, while adjusted earnings were down from $0.50 a year earlier.
The earnings report landed one day after Elon Musk confirmed that independent directors at Tesla and SpaceX had formed special committees to examine a potential merger. Musk said the idea had a lot of merit, but stressed that no terms have been agreed and success is not guaranteed. Because of his dual roles and significant ownership stakes, he is not participating in the committee discussions. A combined entity could have a market value approaching $3.5 trillion, uniting SpaceX’s satellite, launch, and data-center businesses with Tesla’s EV, energy, Full Self-Driving, and robotics operations.
Barclays analyst Dan Levy upgraded Tesla to Overweight from Equal Weight and raised the price target to $450 from $370, implying nearly 19% upside. Levy said the potential takeover premium from a SpaceX merger should support Tesla shares. Analyst Dan Ives estimated an 80% to 90% probability of a merger by the end of 2027 and argued a deal would require Tesla shares above $500. He also pointed to SpaceX’s recent $40 billion debt financing for GPUs as a way to expand computing infrastructure.
Tesla reported 1.74 million Full Self-Driving users at the end of the third quarter, up from 1.04 million a year earlier, with more than 75% of new North American Tesla deliveries including FSD subscriptions. Barclays expects energy storage shipments to grow more than 50% in 2027, supported by data-center demand. Tesla also said cumulative unsupervised Robotaxi miles rose eightfold during the quarter, although the rollout has been slower than initially expected.
Any merger would still face major hurdles, including Tesla shareholder approval by a majority of all outstanding shares, regulatory reviews, valuation negotiations, and integration challenges.
