Tesla and SpaceX might merge, how can advisors manage Elon Musk’s role on markets?
What does Musk get from the possible merger?
Johnson outlined the reasoning behind a merger given that beyond their shared CEO, a rocket company and an electric vehicle manufacturer don’t automatically seem like a single unified business. He notes, though, that both companies are heavily connected to the AI theme, with SpaceX owning XAI and Grok, and Tesla developing AI-driven humanoid robots. Beyond the interesting implications these companies and similar tech giants have for our understanding of sector categorization, Johnson sees that AI underpinning as a route to both connection between the two firms and the advantages a merger might create for them.
There is also the question of whether this merger would see SpaceX included in the S&P 500, which did not change its index rules to accommodate the company after its IPO like some others did. Tesla is a major component of the S&P 500. Johnson notes that this is still yet to be determined, and questions whether the goal is really at the core of Musk’s motivation.
Johnson adds, however, that a potential merger might give Musk voting control of the combined entities, given the scale of his voting control in SpaceX. He speculates that Tesla investors, especially those who hold it outside of passive vehicles, might be supportive of the idea given the popularity Elon commands among a certain cohort of investors.
“I don’t think we’ve been in this position before… a time when we’ve had two companies that have been so significant in terms of market cap size with a common controlling entity or group,” Johnson says. “But everything Elon Musk does has a novel aspect to it. Landing rockets after flying them, making the electric car mainstream, self-driving technology, putting computer chips in people’s brains. He does a lot of stuff that’s novel, and that’s kind of par for the course with this guy.”
Investing around Elon
As an ETF manager with a number of specialized tech ETFs, Johnson accepts that Elon Musk plays a significant role in many of the areas he is focused on. While Johnson is quick to praise Musk’s various successes, he emphasizes that the approach at Evolve ETFs is based on investment fundamentals which can help to tune out some of the noise generated by and around the world’s richest man. He believes that investors can be better served by asking themselves if they have the right exposures to “the technology that’s changing the world.”
