Baird Predicts Over 80% Probability of Tesla-SpaceX Merger, Expected Within 12 to 18 Months
Miles Bennett
Baird analyst Ben Kallo puts the probability of a Tesla–SpaceX merger at over 80%, with a 12-to-18-month timeline; if it lands, the combined entity would rival Nvidia, Google, and Apple — but a yawning valuation gap is the biggest hurdle.
Where does the 80% figure come from?
Baird analyst Ben Kallo calls the deal the "ultimate endgame," assigning it an 80%-plus probability within 12–18 months.
This means → In Kallo's framework, the merger is not an if question — it is a when-and-at-what-price question.
Since SpaceX completed the largest IPO in history last week, Tesla shares have held above $400 — the market is already pricing in merger expectations.
How does AI tie the two companies together?
On the surface, one builds cars, the other builds rockets — almost no overlap. But AI is becoming the core link: SpaceX acquired xAI in February, then co-founded Terafab with Tesla to enter chip manufacturing.
In plain terms = both companies need massive compute. A merger lets them share chip capacity and AI infrastructure — the bigger the scale, the lower the unit cost.
Kallo's own words: the two companies share a need to scale, and a merger would let both "benefit together from greater size."
How wide is the valuation gap?
SpaceX's valuation tripled in a year: roughly $400 billion a year ago → about $1 trillion when it acquired xAI in February → $2.05 trillion at Tuesday's close.
Morningstar analyst Seth Goldstein posed the key question: with SpaceX trading at far higher multiples, why would Tesla shareholders agree to pay up?
This means → Pricing is the hardest technical obstacle. SpaceX holders won't accept a steep discount; Tesla holders won't accept a steep premium. Both sides need a middle ground.
Goldstein added: if SpaceX shares pull back toward his fair-value estimate of $63, willingness on both sides could increase.
Who owns the "Musk premium" now?
Roundhill Financial CEO Dave Mazza noted that for years, Tesla was the only public way to hold the "Musk premium."
In plain terms = investors who wanted exposure to Musk's vision had one option — buy Tesla stock. Now SpaceX is public too, and Tesla no longer has that trade to itself.
Mazza went further: Tesla's ability to hold $400 is not about fundamentals — it is about an acquisition premium forming.
What happens if the merger falls through?
Mazza warned: without a deal, Tesla has no shortcut — it must deliver real results on Robotaxi and the Optimus robot to justify the stock price.
Baird forecasts Tesla Q2 deliveries at roughly 392,900 units (due before the open on July 2), with full-year 2026 deliveries at 1.68 million.
This reflects a race against time: whether the merger narrative can keep supporting the valuation depends on whether Musk actually pushes the deal forward — and that proof point arrives in lockstep with Tesla's own quarterly execution.
Content is for reference only, not financial advice.