Musk Confirms Special Committees Formed for Potential Tesla-SpaceX Merger

In a significant development for the automotive and aerospace industries, Elon Musk announced that special committees have been established by both Tesla and SpaceX to explore the possibility of a merger between the two companies. This revelation came as SpaceX reported robust third-quarter financial results, significantly exceeding Wall Street expectations.

SpaceX earnings in focus as Starlink growth and AI spending take center stage

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SpaceX Surpasses Expectations with Strong Q3 Performance

SpaceX shares saw a notable increase of approximately 8% in extended trading following the announcement of its third-quarter earnings. The company reported staggering 161% revenue growth, reaching $14.58 billion, which surpassed the LSEG consensus estimate of $12.72 billion. Adjusted earnings per share came in at 45 cents, significantly beating the expected 13 cents.

Operating income for the quarter stood at $2.8 billion, a substantial turnaround from a net loss of $1.05 billion in the same period last year. The company's outlook for the first quarter of 2027 is equally optimistic, with projected revenue between $33 billion and $37 billion, far exceeding the average analyst estimate of $22.2 billion.

AI and Starlink Drive Growth

The company's artificial intelligence (AI) business, now referred to as "Super Intelligence," has emerged as its largest segment, experiencing a ninefold increase in revenue to $7.56 billion, up from $813 million year-over-year. This growth is attributed to new cloud services agreements, the acquisition of AI coding startup Cursor, and increased adoption of its Grok AI models. SpaceX invested heavily in its AI division, with over $16.4 billion of its $19.6 billion in capital expenditures directed towards this area.

SpaceX's connectivity segment, primarily driven by its Starlink satellite internet service, also showed significant strength. Starlink's subscriber base grew to 13.6 million, up from 12 million in the previous period, contributing $5.25 billion in revenue, a 69% increase from the prior year. The company is also making strides in expanding Starlink's reach, including plans for a U.S. mobile network following its acquisition of 800 MHz of low-band spectrum.

Potential Merger Discussions

On the earnings call, Elon Musk expressed his belief that a merger between Tesla and SpaceX would be a "good idea," emphasizing the potential for synergy, particularly in the realm of artificial intelligence. He confirmed that independent directors on the boards of both companies have formed special committees to discuss a potential tie-up. Musk acknowledged that as a "conflicted party," he would not be directly involved in these discussions, noting the high hurdle of requiring a 50% vote of all shareholders for approval.

A fleet of Tesla Cyber trucks is parked at charging stations outside the SpaceX launch production facility in Starbase, Texas, U.S., July 20, 2026.

Steve Nesius | Reuters

Other Developments

In other news, SpaceX's launch business generated $1.77 billion in revenue for the quarter. The company is also facing a lawsuit from the NAACP over alleged Clean Air Act violations related to its methane gas-burning turbines used for power in Memphis. Furthermore, reports suggest Musk previously ordered restrictions on Starshield, a military version of Starlink, in Ukraine, impacting some military operations.

Musk also announced plans for SpaceX to begin chip production at its planned Terafab factory in Texas by the third quarter of 2028, with partners including Tesla and Intel. The company is also investing heavily in its AI data center build-out, with significant capital expenditures dedicated to this division.

Tesla is set to report its third-quarter results on Wednesday, with analysts predicting a slight dip in revenue compared to the previous year.