After the xAI merger, SpaceX’s price is close to Tesla’s

Elon Musk’s move merge SpaceX is signaling a changing of the guard at its corporate empire with its cash-burning artificial intelligence venture xAI.

Tesla It was the source of Musk’s liquid wealth and much of his fame. But after Monday’s merger, Tesla’s market cap of about $1.58 trillion is just 26% higher than SpaceX’s $1.25 trillion standalone market value.

Musk has an estimated 43% stake in SpaceX, compared to 13% in Tesla. That means SpaceX accounts for more than half of Musk’s paper fortune, which has topped $852 billion. Forbes real-time billionaire index.

And Tesla’s value has plummeted year-to-date, with shares down 6% through 2026. Tesla in early January reported announced a 16% year-over-year drop in vehicle shipments and a 3% drop in total revenue in 2025 at the end of the month. first annual decline in the record.

Tesla’s core car business has been struggling of late due to competition from electric vehicle makers in China and Europe and the recent elimination of federal tax breaks for EV purchases in the US. The brand has suffered from Musk’s involvement in politics, including his work with the Trump administration, and support from far-right figures in Europe.

As Tesla’s EV sales weakened, Musk shifted the company’s focus to ride-hailing Robotaxi and Optimus humanoid robots, markets in which Tesla faces major competition and currently has no real business.

Musk told analysts last week that Tesla finish production The Model S and X will change the priorities of the cars. Those older models accounted for less than 3% of Tesla’s annual vehicle deliveries in 2025, and the company now plans to use the assembled lines for Optimus.

At SpaceX, Musk has a much stronger market position.

The rocket maker is a leading provider of orbital launch services with multibillion-dollar-a-year contracts with NASA and the Department of Defense. SpaceX also owns and operates the Starlink satellite internet service, which has more than 9,000 satellites in orbit and about 9 million customers, and even operates a company campus in Texas called Starbase.

As SpaceX looks to go public this year, the company is in a particularly favorable position, especially since Jared Isaacman, a business partner and former investor in SpaceX, leads NASA.

The merger was announced on Monday values SpaceX for $1 trillion and xAI for $250 billion, according to documents seen by CNBC. The deal follows an earlier merger between the two Musk entities last year when it became xAI was purchased social media platform X, formerly known as Twitter, is in a stock deal.

Musk has legions of fans and institutional backers, as well as retail shareholders who have come to own through platforms like Tesla. Robinhood“Muskonomy” is a group of interconnected companies.

According to Musk, SpaceX bought xAI to develop data centers in space and escape the energy constraints on Earth.

In a note Tuesday, analysts at Moffett Nathanson wrote that the future of SpaceX’s dedicated orbital data center, proposed in a filing with the Federal Communications Commission, would require “simply enormous” capital. SpaceX has requested permission to launch up to 1 million satellites as part of this initiative.

“At a minimum, given the required operational maturity, supply chain development and financial requirements, it is safe to conclude that full-scale construction is not imminent,” the analysts wrote.

Its operation will require yet-to-be-developed technical solutions for managing radiation and cooling in space, even exceeding the costs of launching and building large-scale heavy machinery.

Despite the high valuation SpaceX now commands — only eight American companies are worth more — the merger could bring additional headaches for shareholders.

In addition to channeling SpaceX’s revenue to fund xAI’s massive infrastructure costs, there are many legal risks and regulatory issues that come with a new company.

XAI is being investigated by authorities in markets including Europe, India, Malaysia and the US. Attorney General of CaliforniaFollowing the Grok image generator, users can create and share “deep fake” candid images of children and women.

French investigators on Tuesday made a raid X’s offices and Musk have been ordered by prosecutors to answer questions related to alleged misuse of algorithms.

In X, Musk called raid “political attack”.

Eric Talley, a law professor at Columbia University, said some of the regulatory risks facing xAI could be borne by SpaceX investors. While SpaceX’s defense contracts are concentrated in the US, much of its Starlink business is international.

“Different regulatory bodies may say you have to be in good standing as an entity to continue doing business in their jurisdiction,” Talley said. Although SpaceX’s subsidiaries are not liable to each other, they may affect each other’s “regulatory status,” he said.

Such complications may be easier for Musk if SpaceX remains private and he retains control without the worry of wild stock price swings. But whether or not SpaceX can maintain a high public market valuation while accepting the new risks associated with xAI is another story entirely.

Appropriate ReutersSpaceX made about $15 billion in revenue and $8 billion in profit last year. Meanwhile, Tesla expects sales of about $95 billion in 2025, with adjusted earnings of about $5 billion, a sharp decline from 2024.

In order for Musk to get the liquid in his SpaceX holdings, he needed Wall Street to buy his company’s listed price.

Tesla shareholders are at least interested in a positive outcome. The EV company said it agreed last week 2 billion dollars will be invested As part of a funding round that closed earlier this month on xAI.

“Tesla’s recent xAI investment is now a SpaceX investment,” Ann Lipton, a University of Colorado law professor and former corporate and securities attorney, said in an email. The merger is “more evidence that Musk wants to do transactions across his empire, but we already knew that.”

For Tesla investors worried about Musk’s focus outside the company, they can only hope that the prospect of a $1 trillion long-term payout is enough to keep him from straying too far.

Payment package for Mask, approved In November, according to shareholders, it consists of 12 tranches of shares that will be issued if Tesla achieves certain results. stagesincluding market price growth and operational excellence over the next decade. The first tranche of stock will be paid if Tesla reaches a market capitalization of $2 trillion, about $400 billion more than its current valuation.

— CNBC’s Robert Frank, David Faber and Ari Levy contributed to this report.

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