Episode summary
Three Reasons a SpaceX and Tesla Merger Might Actually Work
Summary
Dylan Grice argues that SpaceX’s latest results make a Tesla merger look less far-fetched than it did a year ago. He points to SpaceX revenue of 7.8 billion, up 92% from 4.1 billion, a quarterly loss narrowed by 467 million to 541 million, and adjusted EBITDA of 3.5 billion, up 191%. The standout business is Starlink, but he notes ARPU fell from the mid 80s to around 60, suggesting the company is pushing into a broader, lower-priced market.
The stock, in his view, was weighed down by heavy spending rather than weak operations. He says SpaceX guided to 18.4 billion in capex, with 15.8 billion going to AI compute and only about 3 billion left for rockets. That puts SpaceX in the same capital-intensive race as Google, Amazon, Apple, and Microsoft, while also increasing the overlap with Tesla’s own AI and robotics ambitions.
Grice’s three merger arguments are that both businesses are really about automated complex machines, that merging would clean up governance concerns from shared management and shared technology, and that valuations are becoming close enough to make a deal plausible. He says SpaceX trades around 1.5 trillion versus Tesla at 1.3 trillion, with forward P/E multiples of about 190 times and 167 times, respectively.
Key takeaways
- Dylan Grice says SpaceX’s earnings were strong, but the market focused on the company’s 18.4 billion capex plan and 15.8 billion in AI compute spending.
- He argues SpaceX and Tesla both aim at automated machines, from robotaxis and humanoid robots to flying rockets, so their infrastructure needs increasingly overlap.
- Grice says a merger could reduce governance concerns because Musk already moves engineers, executives, and technology across both companies.
- He notes SpaceX’s valuation has fallen enough to make a merger of equals more plausible, with SpaceX around 1.5 trillion and Tesla around 1.3 trillion.
- He says SpaceX’s Starlink growth is real, but lower ARPU from the mid 80s to around 60 suggests a broader, more price-sensitive customer base.
Notable quotes
“Revenue was 7.8 billion, up 92% from 4.1 billion. great results”
“Quarterly loss of 541 million, which is an improvement of 467 million”
“they're going to expect for the quarter $18.4 billion in capex, of which 15.8 billion, most of it was for AI compute”
“both of these if you look at the combined business here well first of all in 2025 Tesla generated roughly five times as much revenue as SpaceX did”
“So look, both companies they trade at similar ranges and both companies surprisingly trade at broadly similar price forward PE multiples”
How the episode opens
Morning. This is Dylan Juven with Behind the Markets. Happy Thursday.
Today's Thursday, August 6, and today I'd like to share with you three reasons why a SpaceX Tesla merger may be a good idea after SpaceX reported its earnings. So, first of all, let me talk about the earnings. For those of you who own SpaceX stocks, we saw the results.
I have my notes here. Revenue was 7.8 billion, up 92% from 4.1 billion. great results.
Quarterly loss of 541 million, which is an improvement of 467 million. And even more importantly, for those of us who care about cash flow when we buy an actual business, we saw IBIDA of 3.5 billion, up 191%. Well, he uses an adjusted IBIDA figure, which you know, you always learn when you start working on Wall Street is you have to kind of readjust it to make it real.
So, look, everything was good in the business. I mean, Starlink stole the show. Starlink is growing.
So, user base is growing. Millions and millions of new people added. The downside to Starlink's growth is that their ARPU, their ARPO, their average revenue per user was notably down from the mid 80s per person to 60s per person.
Remember something. If you're making $60 per person per year or per month, basically what that means is that it costs you you can only spend less to get the customer. So basically, you know, you have to pay money to get the customer, your customer acquisition cost, then you sell them your Starling product.
And so we've seen that go down the amount they're able to charge people, which means they're going into a wider market. But you know, look, the stock came out with decent results, but it sold off due to huge capital spending.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- spacex earnings
- tesla space ai integration
- ai capex infrastructure
- arpu starlink
- musk merger thesis
Companies and tickers mentioned
- TSLA
- GOOGL
- GOOG
- AMZN
- AAPL
- MSFT
- SpaceX
- Tesla
- Amazon
- Apple
- Microsoft
Watch the episode
Watch “Three Reasons a SpaceX and Tesla Merger Might Actually Work” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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