The Elon-verse expands

What’s the only thing that can top the biggest IPO of all time? The biggest merger of all time.

Yesterday, Elon Musk announced that his rocket company, SpaceX, has acquired his social media company, xAI, and the two are now one massive enterprise. The deal gives SpaceX a $1 trillion valuation and pegs xAI at $250 billion. SpaceX is still trying to go public later this year in what is expected to be the biggest public debut in market history.

The new company’s humble goal will be to “form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and speech platform,” according to the announcement on SpaceX’s website.

TLDR: They’re building data centers in space, obviously.

Tesla swerves into orbit

With all this talk about Elon’s empire, you might be wondering where his crown jewel, Tesla, fits in. Fear not: Tesla is woven into the already uber-complicated web of corporate finance.

Tesla disclosed a $2 billion investment in xAI during its Q4 earnings call, and according to Wedbush analyst and Tesla bull Dan Ives, that could just be the beginning.

“Musk wants to own and control more of the AI ecosystem and step by step the holy grail could be combining SpaceX and Tesla over the next 12 to 18 months in some form to give the connected tissue between both disruptive tech stalwarts looking to lead the AI Revolution,” wrote Ives in a note today. Ives has a $600 price target on Tesla, the highest on Wall Street.

To Ives and other Tesla bulls, the idea of Musk pulling off his vision for a gigantic AI mega-company is bullish news. But other analysts aren’t quite as optimistic. After all, Tesla trades about 200x estimated 2026 earnings, while SpaceX is closer to 400x, according to Barron’s, creating a serious valuation discrepancy. Closing that gap may require Tesla to issue more shares, diluting current shareholders.—LB