SpaceX's $500 Price Target From JPMorgan Signals A Bigger Bet On AI Than Rockets -- Analyst Maps Out Potential Premium In Tesla Merger

JPMorgan sees strategic rationale for a potential Tesla-SpaceX merger but flagged Chinese regulatory approval as a key hurdle, while raising its SpaceX price target to $500 on higher growth estimates.

• JPMorgan sees a potential SpaceX-led, all-stock deal with a 30%-35% premium to Tesla shares, according to The Fly.
• The firm raised its SpaceX price target to $500 from $240, citing its growth outlook and estimating $254 billion in 2027 revenue.
• JPMorgan outlined possible ways to address Chinese regulatory concerns, including ring-fencing Tesla’s China business or transferring control to a China-based consortium.

Tesla (TSLA) shares are in focus after JPMorgan maintained its 'Neutral' rating and $415 price target following Elon Musk’s announcement that Tesla and SpaceX (SPCX) had formed special committees to review a potential merger.

According to The Fly, JPMorgan said the “logic for a combination remains coherent,” citing shared engineering talent, AI infrastructure, the Terafab chip facility in Texas, and Musk’s leadership and engineering philosophy.

TSLA shares rose 3%, while SPCX shares climbed 10% at the time of writing.

China Regulatory Approval Could Pose A Hurdle

JPMorgan sees a SpaceX-led, all-stock transaction with a 30%-35% premium to Tesla shares as a likely potential structure, according to The Fly. The firm said such a deal would imply a merger of equals and meet the threshold for Musk to retain more than 50% voting control of the combined company.

JPMorgan identified shareholder and regulatory approval as key hurdles, with China posing a particular challenge because of SpaceX’s U.S. government and defence ties.

Additionally, according to a report published by Investing.com, JPMorgan outlined a potential structure to address Chinese regulatory concerns, including ring-fencing Tesla’s China business or transferring control to a China-based consortium. The proposed arrangement could allow Tesla to continue generating revenue through licensing its brand and Full Self-Driving technology, as well as potential future Optimus-related arrangements. 

JPMorgan Raises SpaceX Price Target To $500

Separately, JPMorgan analyst Doug Anmuth nearly doubled the firm’s price target on SpaceX to $500 from $240 and maintained an 'Overweight' rating following its third-quarter report, according to The Fly. The company beat sales expectations across all three segments, but Anmuth identified superintelligence as the primary driver going forward.

SpaceX expects to end 2026 with between 2 and 3 gigawatts (GW) of compute capacity and build an additional 10 GW in 2027, well above the range previously expected, according to the note published by The Fly. JPMorgan also said SpaceX told the firm during a discussion with management that it was not considering raising equity.

JPMorgan said its 2027 and 2028 estimates had more than doubled and cautioned that achieving them would require expanding compute capacity, securing significant capital and sustaining strong demand.

How Retail Views SPCX-TSLA Partnership

On Stocktwits, retail sentiment toward TSLA remained ‘bullish’ over the past 24 hours, with message volume at ‘high’. Meanwhile, sentiment toward SPCX shifted to ‘extremely bullish’ from ‘bearish’, while message volume remained ‘high’. SPCX was also among the platform’s trending tickers at the time of writing.

One bullish Stocktwits user pointed to Tesla’s after-hours move to a new all-time high and predicted that revenue from its Full Self-Driving (FSD) subscriptions could surprise investors.

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Another user cited Elon Musk’s reported $1 trillion revenue outlook for SpaceX by the end of next year and expressed optimism about the company’s longer-term growth prospects.

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TSLA shares are down more than 17% year to date, while SPCX shares have gained over 8% during the same period.

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