Tesla Just Reclaimed $400 as SpaceX Merger Hopes Build
Tesla crossed a price level it lost for months, and Wall Street is betting a SpaceX merger explains the move, but no deal has been signed and Tesla's own profits keep shrinking.
Tesla (NASDAQ:TSLA | TSLA Price Prediction) closed above $400 on October 27, 2026, for the first time since July 10. The rally was driven by hopes for a merger with SpaceX (NASDAQ:SPCX) that has not been signed.
Tesla rose 4.04%, or $15.84, to $407.46 after reaching $408.45, then traded at $408.05 after hours. That left a market value of $1.61 trillion and a two-session gain of 9.5% from $372.22 on October 23.
The level matters because Tesla lost it in July. After closing at $407.76 on July 10, the stock fell 14.5% on July 23 and closed as low as $298.32 on July 29. It now stands 37% above that low but 18% below its 52-week high of $498.83.
SpaceX rose a smaller 1.14% to $148.58. A rally built on merger hopes suggests that SpaceX now accounts for a large part of Tesla’s valuation.
What Is Signed and What Is Only Talk
No merger agreement has been filed. Tesla’s latest 8-K (a filing that reports major company events), dated October 21, and SpaceX’s, dated October 20, report no exchange ratio, price, or schedule.
Both boards formed special committees of independent directors, which Elon Musk disclosed on SpaceX’s October 20 call. He said a merger would be “a good idea, but it’s really up to the special committees of both companies.”
SpaceX reportedly approached Tesla in recent weeks. An all-stock deal was among the options, with a push to announce a deal by the first half of 2027.
SpaceX’s market value of $2.02 trillion is larger than Tesla’s. In an all-stock deal, the exchange ratio (how many shares of one company each share of the other converts into) and any premium would decide how much of the combined company Tesla holders keep.
SpaceX also brings more profit. It earned $4.4 billion of third-quarter net income on $14.6 billion of revenue, while Tesla earned $787 million on $28.046 billion.
Musk-Linked Boards Face a High Shareholder Bar
Reporting on October 27 questioned how independent those committees are. Musk has not named their members. Tesla director Ira Ehrenpreis joined SpaceX’s board in February, and Kimbal Musk has also served on SpaceX’s board.
“Because I’m a conflicted party, I can’t actually be in the discussions of the special committees,” Musk said. Approval requires 50% of all outstanding Tesla shares, which he called “quite a high hurdle.” Any share that does not vote counts against the deal.
One analyst calculated that a takeover valuing Tesla near $506 a share, or $2 trillion, could vest the first portion of Musk’s 2025 award, worth roughly $6 billion to him. It is unclear whether a deal between two Musk companies counts as a change of control.
Auto Profits Are Still Falling
An analyst upgrade on October 26 came with a $450 target. In the third quarter, however, operating income fell 55.79%, and free cash flow dropped 61.63% as capital spending rose 110.5%.
The Cybercab is central to Tesla’s effort to cut costs. Engineering executive Lars Moravy described a production line. It would have more than 125,000 units of annual capacity and about 78% automation, building a vehicle designed around cheaper LFP batteries.
What Tesla’s Valuation Already Assumes About a Deal
At about 425 times earnings, Tesla is priced for a merger whose terms, timing, and vote are all unknown, while its operating profit keeps shrinking.
SpaceX’s own results show where much of the combined value stands. Connectivity revenue rose 69%, and SpaceX holders face no exchange-ratio uncertainty in that business.
This view is wrong under one condition. It would change if the two companies file signed terms that include a premium for Tesla holders before the December 3, 2026 shareholder meeting at Gigafactory Texas. Without that filing, a close back below $400 is the more likely outcome.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
