Tesla Stock (TSLA) Falls as JPMorgan Calls SpaceX Merger Idea 'Coherent on Paper'

Shares in EV giant Tesla (TSLA) dropped about 4% on Tuesday afternoon. This came after JPMorgan (JPM) noted that a merger with satellite and rocket firm SpaceX (SPCX) overlooks the practical challenges of securing regulatory approvals across multiple jurisdictions. Still, the firm noted that the idea is "strategically coherent on paper."

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SpaceX-Tesla Merger Speculation Grows

Elon Musk, the world's richest person, is the CEO of both Tesla and SpaceX. The aerospace firm brought artificial intelligence startup xAI under its wings earlier in February and has now renamed it SpaceXAI. This means that social media platform X -- which is owned by xAI -- is also now under SpaceX

Earlier this month, SpaceX debuted on Nasdaq in the world's largest-ever initial public offering (IPO). It raised $75 billion from the offering at a valuation of $1.77 trillion. The historic IPO fueled speculation that Musk might also decide to bring Tesla under SpaceX, creating a global tech powerhouse.

Why JPMorgan Sees a Possible Merger as Problematic

Chipping in, JPMorgan analyst Rajat Gupta noted a merger would make strategic sense. This is because Tesla and SpaceX could complement each other in several high-tech areas. This includes AI, robotics, energy, transportation, and space infrastructure.

However, approval in multiple countries would prove very difficult, especially in markets such as China. Gupta reaffirmed his Hold rating on Tesla stock. The analyst's previous price target of $475 on TSLA implies about 16% upside.

Who Is Rajat Gupta?

Gupta is a four-star analyst who ranks in the top 16% of the more than 12,000 Wall Street analysts tracked on TipRanks. He covers the automotive industry, including carmakers such as Rivian (RIVN) and used-car retailers such as Carvana (CVNA).

The analyst currently has a 50% success rate and has generated an average return of 8.80% for investors based on his ratings, as shown in the image below.

Is Tesla a Buy or Sell Today?

On Wall Street, Tesla's shares currently have a Hold consensus rating from analysts. This is based on 10 Buys, 15 Holds, and three Sells issued by 28 analysts over the past three months.

Moreover, the average TSLA price target of $399.71 implies about 1% downside risk (see TSLA stock forecast here).