I agree with Amy’s second bullet that a merger creates more upside. I’m for a merger in theory.
However the point Bradford is trying to make is that it matters a lot what the exchange ratio is. My strong sense is that Tesla is close to an inflection point in profitability, and if that happens I’d expect the stock to revalue upwards significantly. SpaceX is also undervalued according to our valuation model, but not nearly as much as Tesla.
So my view is that a hypothetical combination of the two companies at their current valuations would be less favorable than waiting a bit for Tesla’s valuation to move.
The main point Bradford and I want
$TSLA shareholders to consider is that it makes a huge difference to their upside if
$TSLA shareholders get ~40% of the combined entity (that’s what the math would be today) vs. waiting a bit and potentially having 60% or 75% .
This exchange ratio matters a lot, even if we think there is still upside at the current level.
I mean just imagine if the companies had combined in 2021; Tesla shareholders would’ve had >90% of the combined company! It would clearly have been more advantageous for us to do a deal at those economics than at what could be contemplated today.
My view is that Tesla has more significant near term valuation catalysts than SpaceX, and I strongly suspect Tesla investors could get a better deal by waiting for the relative valuations to adjust.
I’ll happily stick up for current
$TSLA holders by pointing this nuance out, even if it means being labeled as a FUD-spreader by some.