Tesla TSLA shares fell close to 2% on Thursday, extending their losing streak to four sessions as a broader technology sell-off and speculation about a potential merger with SpaceX weighed on investor sentiment.
The electric vehicle maker’s shares have declined around 18% this year, with investors assessing the company’s ambitious artificial intelligence plans, upcoming product announcements and the possibility of a major corporate restructuring under CEO Elon Musk.
Attention has now turned to the prospect of Tesla combining with SpaceX, a move that could bring Musk’s automotive, space and AI ambitions closer together.
SpaceX-Tesla merger could be announced in december
Barclays analyst Dan Levy said Thursday that a merger between Tesla and SpaceX could be announced before Tesla’s annual meeting on December 6.
According to Levy, such a transaction would represent another step in Musk’s broader artificial intelligence ambitions. SpaceX is expected to be the likely acquirer, with the deal potentially structured as an all-stock transaction in which Tesla shareholders receive shares in SpaceX.
Based on the current valuations, SpaceX has a market capitalization of around $2.1 trillion, compared with approximately $1.5 trillion for Tesla.
Musk would own about 37% of the combined company under a transaction based on those valuations, while retaining roughly 57% of its voting power, according to Barclays.
Musk has recently hinted at the possibility of combining the businesses, saying that Tesla overlaps “on so many fronts with SpaceX.”
A merger could bring together Tesla’s electric vehicles and robotics operations with SpaceX’s space technology and the companies’ wider AI ambitions.
Tesla’s Roadster reveal in focus
Tesla is also preparing to unveil its long-promised Roadster sports car on Thursday at a SpaceX test facility in Texas.
The company is expected to demonstrate a version of the vehicle capable of flying, adding to the anticipation surrounding the long-delayed model.
Musk previously described the planned debut as an event that “might be one of the most spectacular demos ever.”
Despite the attention surrounding the announcement, questions remain about the Roadster’s potential commercial impact and whether the launch can materially change investor expectations for Tesla.
Andrew Rocco, a stock strategist at Zacks Investment Research, said the product could generate considerable excitement but may not significantly affect the company’s financial performance.
“It’s going to be an exciting product. Likely, it’s going to build a lot of hype, but I don’t think that it’s going to be a needle mover,” Rocco told Bloomberg. “Musk loves to build hype around the brand.”
The upcoming reveal therefore represents another test of Tesla’s ability to translate product announcements and ambitious demonstrations into sustained investor confidence.
Broader tech sell-off adds pressure
Tesla’s decline also came against a difficult backdrop for technology stocks, as concerns about AI spending and financing costs weighed on companies associated with the industry.
Investors have been reassessing the scale of investment required to build AI infrastructure and whether those commitments can generate sufficient returns, adding pressure to valuations across parts of the technology sector.
The Philadelphia Semiconductor Index declined for a seventh consecutive session with the Nasdaq composite also in red.
The broader macroeconomic environment has added to the uncertainty. US wholesale inflation accelerated in September to its highest level since 2022, raising concerns that price pressures could persist and limit the Federal Reserve’s room to ease monetary policy.
Earlier in the day, UBS projected another Federal Reserve rate increase in March 2027, extending its forecast for the central bank’s tightening cycle.
Higher interest rates can weigh on equity valuations by increasing borrowing costs and making bonds more attractive relative to stocks. The prospect of prolonged monetary tightening has therefore added another source of pressure for growth-oriented companies.
The post Why Tesla is falling ahead of Roadster sports car launch? appeared first on Invezz
