Tesla and SpaceX explore merger, but stock needs more than rockets

Tesla and SpaceX have formed committees to explore a rumoured merger, but investors see little immediate catalyst for Tesla's stock, which has dropped 17% in 2026. Elon Musk announced the move ahead of Tesla's third-quarter earnings, with details expected Wednesday evening. The potential combination would merge Tesla's electric cars and robotics with SpaceX's rocket launch, AI, and satellite internet operations. However, analysts say the stock needs evidence of AI delivery or profitability in physical products, not just merger news, to reverse its worst year since 2022. Dave Mazza of Roundhill Investments, which holds both companies' shares, called the announcement "a confirmation of the least kept secret out there," adding that "now the details will matter." Tesla's stock decline contrasts with a 13% gain in the S&P 500 over the same period.