Elon Musk took a question on Tuesday that he clearly knew was a minefield, and he said so right away. "I feel like I'm tap dancing through a minefield, so I have to be thoughtful about what I say here," he said on SpaceX's third-quarter earnings call.
The topic? A potential combination of Space Exploration Technologies Corp. (NASDAQ:SPCX) and Tesla Inc. (NASDAQ:TSLA). Musk confirmed that both companies have formed special committees to weigh the idea, but he pushed back hard on the notion that a deal is inevitable.
What Musk Said
"Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders," Musk said, adding that the committees consist of independent directors. As a conflicted party, Musk said he cannot take part in the discussions. "It's sort of an odd kabuki dance where two groups of people are talking and I can't be in the conversation," he said.
He was quick to throw cold water on the idea that a merger is a done deal. "Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it," Musk said. Still, his personal view was clear: "Do I think it would be a good idea? Yes."
The biggest obstacle is shareholder approval. Musk said a deal would need a 50% vote of all Tesla shares, not only those cast, and called the threshold "quite a high hurdle to try to achieve." He added that the special committees "have not reached agreement on the terms of any transaction," with no guarantee they will.
Musk listed superintelligence software, chip design, the Terafab project, robotics and Starlink connectivity as areas where the companies could benefit from working together. "It's really up to the special committees of both companies," he said. "They've got to come up with something and then that's got to be put to the shareholders as a vote."
Background
The remarks mark a shift from July. Responding to a Wells Fargo analyst on Tesla's second-quarter call, Musk said combining the companies could not be discussed on an earnings call and would require a proper process. Speculation has continued to build since. Ahead of Tuesday's call, a question about the timing of a potential SpaceX-Tesla merger drew heavy support among submitted investor questions. The two companies have had business and financial ties for years and have even shared personnel and some board members.
The merger comments came alongside strong quarterly results. SpaceX posted third-quarter revenue of $14.58 billion, topping analyst estimates of $12.74 billion, and earnings of 35 cents per share versus expectations of 12 cents, according to MarketDash. Revenue from its Super Intelligence segment climbed 830% year-over-year to $7.6 billion.
SPCX Stock Price Activity: SpaceX stock was up 2.35% at $151.26 during after-hours trading Tuesday, according to MarketDash.
