Tesla, led by Elon Musk, successfully demonstrated a levitating version of its Roadster sports car using SpaceX rocket technology, drawing renewed market attention to the possibility of a merger between the two companies.
Market experts said the demonstration served as proof of the technological synergy between Tesla and SpaceX and would have a positive effect on merger discussions between the two firms, U.S. business outlets MarketWatch and Business Insider reported on the 16th.
Garrett Nelson, an analyst at investment research firm CFRA, gave a positive assessment of the demonstration in a report sent to clients that day, saying the perception that "Musk magic" had returned after a string of disappointing events was spreading and that market sentiment had reached a turning point.
Nelson said he expects no major obstacles to the launch of a so-called "Elon Inc." that would combine the two companies. He raised his price target on Tesla to $475 from $385 and put the probability of a merger being completed by the end of next year at 90%.
Bill Birmingham, head of market research at Rex Financial, said Musk is weaving together the future of transportation by integrating automotive and rocket technology. "This is an act of planting the logic of engineering efficiency for a merger in investors' minds," he said.
Gene Munster, a partner at venture capital firm Deepwater, also wrote on the social platform X, formerly Twitter, that the Roadster event was the latest example of why Musk is eager to combine Tesla and SpaceX.
The prospect of a merger has long been discussed on Wall Street. Major investment banks including Barclays have said a merger plan could be disclosed before Tesla's annual shareholder meeting scheduled for December this year, or sometime next year.
SpaceX management has also signaled a favorable stance on combining the two companies. Gwynne Shotwell, president and chief operating officer of SpaceX, said in a media interview shortly after the company's listing in June that the potential for synergy between the two firms was clear and that a merger would "make Elon's life a little easier."
Musk also emphasized the partnership between Tesla and SpaceX at the Roadster demonstration event held the previous day. "Tesla and SpaceX engineers worked closely together to build something better than the James Bond car," he said, suggesting that the convergence of the two companies' technologies could lead to new innovation.