Scott Galloway warned that Elon Musk’s proposed merger between Tesla Inc. (NASDAQ:TSLA) and Space Exploration Technologies Corp. (NASDAQ:SPCX) could rescue the electric vehicle maker at SpaceX shareholders’ expense, arguing that Musk routinely combines struggling businesses with stronger companies.
Galloway Questions Musk’s Corporate Merger Strategy
"So right now, Tesla is the patient and SpaceX is the organ donor, or SpaceX shareholders are the organ donor," Galloway said Monday on his Prof G Markets podcast episode, titled The $3.5T Bailout: Elon’s Plan To Merge Tesla And SpaceX.
"It’s a real merger with a fake premise," Galloway said, arguing that Musk’s previous acquisitions established a troubling pattern. "When Musk merges something into another, it’s an acknowledgment that it’s about to crater."
"He stuffed Twitter into xAI, which then got folded into SpaceX," Galloway said, comparing the strategy to making another family adopt a struggling child.
He nevertheless acknowledged potential benefits from combining Tesla’s manufacturing capabilities with SpaceX’s computing infrastructure. However, he argued that Tesla investors would benefit disproportionately from exposure to Starlink and artificial intelligence.
"So who wins? Tesla’s shareholders," Galloway said. "That’s like trading, you know, your Buick for a piece of a Gulfstream."
Analysts Disagree Over Potential Shareholder Benefits
Musk recently confirmed that both companies established committees to evaluate a potential combination, which could create a $3.5 trillion enterprise.
SpaceX generated $27.08 billion in revenue during 2026’s first nine months, while Tesla earned $78.67 billion. However, SpaceX burned nearly $35 billion in cash, contrasting with Tesla’s positive free cash flow.
RBC estimated a hypothetical $480-per-share Tesla offer, while investor Gary Black warned that dilution and arbitrage could erode shareholder gains.
Political Risks Could Complicate Historic Merger
Barclays analyst Dan Levy has highlighted potential AI and manufacturing synergies. That said, Reuters reported last week that combining SpaceX’s Pentagon contracts with Tesla’s Chinese manufacturing operations could invite international scrutiny.
In an October 22 interview with Reuters, Derek Scissors, a senior fellow at the American Enterprise Institute, warned that a future U.S. administration could revisit restrictions imposed on a combined company. "This may be the biggest risk to a deal – that it could get unwound in 2029," Scissors said, expressing doubts that the Trump administration would enforce limits on ties between Tesla and SpaceX.
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