US equities sink, technical support levels eyed for bounce
US stock indices fell sharply, breaking key moving averages. Technical support levels could offer a lifeline if buyers step in.
Bloomberg says Musk's allies aim to announce a SpaceX-Tesla merger by mid-2027, combining firms worth around $3.7 trillion, before Trump leaves office.
With mid-2027 now the target for an announcement, the merger talk has a timeline. Tesla's share price is therefore likely to react to every statement from the special committees, while SpaceX shares could move with AI sentiment because SpaceX stock would serve as the currency in any deal. The biggest market threat to the transaction is a prolonged decline in chip and AI equities, which would reduce both SpaceX's valuation firepower and the excitement needed to support such a large combination. November 3's midterm elections inject a political factor: if Democrats take either house of Congress, Musk's businesses could face heightened scrutiny. Across markets, a deal of this size would put more attention on AI-related capital expenditure and cash consumption, especially with investors already asking when those investments will start paying off.
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Musk has made no secret of wanting SpaceX and Tesla together, and there is now a rush to complete the largest deal in corporate history while the White House remains sympathetic and investor enthusiasm holds up.
Summary:
Supporters of Elon Musk are hurrying to lock in a SpaceX-Tesla merger while politics and markets remain supportive, aiming to announce an agreement in the first half of 2027 and complete it before President Donald Trump's term ends, Bloomberg said, citing people familiar with the matter.
A deal would unite two businesses worth around $3.7 trillion, the largest corporate deal ever attempted. On SpaceX's earnings call this week, Musk offered his most forceful public support so far, calling a combination a good idea. He added that he would recuse himself and let special committees from both companies work through the details, warned that securing Tesla shareholder support might be hard, and said no terms were settled. Bloomberg received no response from SpaceX or Tesla when it asked for comment on the timing.
The report said the schedule depends on how comfortable Tesla's board is with the details. Shareholder approval is less of a hurdle at SpaceX, where Musk commands more than 80% of the voting power. At Tesla, where his ownership is about 20%, it will be harder. Still, less than a year ago the board and shareholders signed off on a trillion-dollar pay package for him.
Two threats are shaping the schedule. The midterms take place in under two weeks, and if Democrats win either chamber, Musk and his companies could face investigations while a president approaching lame-duck status loses influence. A lasting slide in chip and AI shares could likewise undermine the investor backing the deal would need. After falling below their $135 IPO price in the wake of the June listing, SpaceX shares have bounced back sharply and are up 47% since August 5. That rebound has made SpaceX stock an attractive currency for a deal in analysts' eyes, although a price decline could complicate the terms.
There are already business links between the two, the clearest example being the Terafab semiconductor plant they run together in Texas, and they have been preparing for closer ties with AI as a unifying theme. For the foreseeable future, each company is expected to go through billions of dollars a quarter in cash, a notable reversal for Tesla after its automotive operations had produced consistent cash flow in recent years.
JPMorgan wrote in a research note that the national security sensitivities created by SpaceX's US defence contracts and Tesla's large China manufacturing base are conflicting forces when it comes to winning regulatory and shareholder approval. The bank added in another note this week that a transaction would probably be all-stock, with SpaceX in the lead.
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