Tesla shares rally as investors bet on SpaceX merger

Tesla ↘ 0.23% shares rose 4% on Tuesday, Oct. 27, and closed at $407.46, according to 24/7 Wall St.. That put the stock back above $400 as investors bet on a possible combination with SpaceX. The gain followed a 5% jump on Monday and pushed the stock through a trendline dating back to its all-time high in December 2025, Investor's Business Daily reported. The rally rests on merger hopes, but no deal terms exist yet.247wallst.com+1

Barclays bets on a deal

On Monday, Barclays ↗ 1.00% upgraded Tesla to overweight from equal weight and raised its price target to $450 from $370, CNBC reported. "With a combination heavily expected, and with expectation for some premium to TSLA stock, we believe this should drive upside for the stock," analyst Dan Levy wrote. He also pointed to a recovering auto business, an energy unit nearly sold out for 2027, and faster growth in robotaxi miles. Barclays had earlier suggested a deal could be announced before Tesla's annual meeting on Dec. 3, according to The Verge.theverge.com+1

Elon Musk said on SpaceX's Oct. 20 earnings call that both companies had formed special committees of independent directors at the request of shareholders. He said a merger would be "a good idea," Reuters reported. He also cautioned that "the special committees have not reached agreement on terms of any transaction and there's no guarantee that they will," BBC News reported. At least 50% of all Tesla shares would have to approve a deal, which Musk called "quite a high hurdle." Both companies later confirmed the committees in their quarterly SEC filings, Yahoo Finance reported.fidelity.com+2

Premium math and the rescue debate

JPMorgan ↗ 1.26% analyst Rajat Gupta expects any deal to be a SpaceX-led, all-stock transaction at a premium of 30% to 35%, Yahoo Finance reported. Gupta named Chinese regulatory approval as the biggest obstacle. Applied to Tesla's $373.71 close on Oct. 20, that premium comes to about $486 to $505 per share, according to Yahoo Finance. JPMorgan still rates Tesla neutral, with a $415 target, Business Insider reported.yahoo.com+2

Some critics say the talks look more like a bailout. NYU professor Scott Galloway called the deal a "real merger with a fake premise." He cast Tesla as the "patient" and SpaceX as its "organ donor," according to 24/7 Wall St..247wallst.com

Weak fundamentals behind the rally

Tesla's third-quarter revenue was roughly flat from a year earlier at $28.05 billion, while operating income fell about 56% and free cash flow dropped about 62%, 24/7 Wall St. noted. The stock now trades near the consensus analyst target. Musk has also promoted Tesla's Cybercab robotaxis, which began carrying paying riders in Austin this month, but robotaxis still bring in very little revenue, Investor's Business Daily reported.247wallst.com+1