Tesla slips as SpaceX shares fall below IPO price

On Thursday, Tesla shares fell 0.9% to $391.06 on the Nasdaq, while SpaceX public shares, trading as SPCX, dropped 3.1% to $131.11, below the $135 IPO price.

An acquisition paid mainly in SpaceX stock would require SpaceX to create and distribute a large block of new SPCX shares to give Tesla investors meaningful ownership. As SPCX declines, the number of new shares required would rise, increasing dilution for current SpaceX holders.

Gary Black, managing partner at The Future Fund, estimated equity dilution for SpaceX shareholders of about 25% under one acquisition model and said the combination could eliminate roughly $750 billion of equity value unless large revenue or cost synergies were realized. He wrote on X: “At $132 and sinking, SPCX can’t just buy TSLA in a 25% dilutive equity deal.”

The overlap in leadership and ownership would create related-party issues. Elon Musk controls about 82% of SpaceX’s voting power and roughly 42% of its equity while serving as Tesla’s chief executive. Independent directors, exchange ratios and valuation assumptions would be examined to ensure minority shareholders receive fair treatment.

The companies have financial links. Tesla disclosed a $2 billion purchase of SpaceX common stock in March that represents less than 1% ownership, and Tesla recognised $87 million of first-quarter revenue from SpaceX purchases of Megapack energy-storage systems.

SpaceX’s market value has pulled back from post-IPO highs, which weakens the purchasing power of its equity for a large deal. Structuring a takeover without substantial dilution to current SpaceX investors would likely require significant cash or debt components or unusually large synergies to justify the lower ownership percentages.