A SpaceX-Tesla union would mark the largest merger of all time. But does the math work?

A new Fortune analysis by my colleague Shawn Tully lays out the math behind a reported potential SpaceX-Tesla merger. The combined entity would carry a $3.4 trillion valuation with SpaceX at an anticipated $1.75 trillion against Tesla’s $1.65 trillion market cap. This would make it nearly three times the size of the largest merger ever completed.

Tully writes: “Capitalizing on the incredible buzz surrounding the pending SpaceX IPO as a strategy for rescuing stricken Tesla makes perfect sense for Elon Musk. At an expected market cap of $1.75 trillion, SpaceX stock looks vastly overpriced—an IPO prominent analysts are saying they’d avoid. So Musk could marshal its inflated shares as currency to pay big for Tesla, even making the deal at its current market cap, a number that’s also over the top based on any conventional metric.”

However, the financial logic is where it gets uncomfortable, according to Tully. For example, SpaceX would issue new shares equivalent to 94% of its current count to absorb Tesla, doubling its share base to 8 billion. But Tesla’s trailing GAAP earnings have collapsed from $15 billion in 2023 to $3.9 billion today and core operating earnings, stripped of regulatory credits and Bitcoin gains, are just $2.3 billion. On top of that, the cash flow picture is even more alarming, he writes.

For CFOs, treasurers, and capital-markets professionals, the situation raises a sharp question: what does it mean when the world’s most watched deal is designed to solve one overvaluation problem by potentially creating a larger one?

You can read Tully’s full story here. 

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Arthur Levine was appointed CFO of SkyAI, Inc. (Nasdaq: SKYA), a financial technology company, effective immediately. Levine has more than 30 years of experience in finance and accounting. Previously, he served as CFO of both EzFill Holdings, Inc. and Sensus Healthcare, Inc., where he led each company’s initial public offering. Levine has held senior finance and accounting leadership positions with various emerging-growth and publicly traded companies, and has recently served as a CFO consultant to several growth companies engaged in IPO, reverse merger, and M&A transactions.

Steve Escaler was appointed CFO of Woodway Energy Infrastructure LLC, a developer, owner, and operator of intrastate natural gas pipelines, effective June 1. Escaler brings more than 25 years of finance experience within energy and infrastructure. Since 2016, he has served as CFO of two privately held upstream energy companies. Earlier in his career, Escaler spent 17 years as an investment banker at Morgan Stanley, Citigroup, and UBS.

Big Deal

Prediction markets have quietly reached a scale that capital-markets professionals should pay attention to. Combined monthly trading volume on Kalshi and Polymarket increased from less than $5 billion in September 2025 to roughly $24 billion in April 2026, according to a Pew Research Center analysis. That exceeds the approximately $14 billion average monthly handle wagered through legal U.S. sportsbooks in 2025.

The significance extends beyond volume. As prediction markets expand into policy, macroeconomic and corporate-event contracts, they are increasingly functioning as real-time aggregators of market expectations. While still far from traditional capital markets in size and liquidity, they offer continuously updated probability estimates on outcomes that can influence asset prices, business decisions and public policy.

Sports, politics and cryptocurrency remain the dominant categories, accounting for roughly 90% of activity across Kalshi and Polymarket. But the growth of contracts tied to economic and corporate developments suggests these platforms are beginning to evolve from niche wagering venues into information markets that investors may increasingly monitor.

Going deeper

“Why Human Agency Matters for Quantum AI” is an article in Wharton’s business journal by Cornelia C. Walther, a visiting scholar at Wharton and director of global alliance POZE. “Quantum AI will accelerate and amplify whatever humans and organizations bring to it,” Walther writes. “Feed it an agency-depleted culture and it optimizes even faster than (agentic) AI already does, toward the wrong destination. Feed it an agency-rich one and the trajectory changes entirely.”

Overheard

“One of the great issues with today’s organizational structures is that many organizations still value credentials and hierarchy over passion and experimentation.”

—Bill Nye, a science communicator, engineer, and television host best known for Bill Nye the Science Guy, writes in a Fortune opinion piece. He serves as a judge for the Toshiba/NSTA ExploraVision competition.