Tesla and SpaceX both reported strong earnings this week but the two stocks have been moving more in lockstep in recent weeks.
Elon Musk’s two largest companies barely moved together this summer but now, with rumors of a potential merger swirling, investors are increasingly treating them as a bet on a business combination even as Musk himself says it isn’t a sure thing.
From mid-June through July, the correlation of Tesla and SpaceX’s daily returns was just 0.10.
In October so far, it’s 0.81.
The black line in the chart below shows how closely Tesla has traded with SpaceX, and the gray line shows the same for Tesla and the S&P 500.
Both are trending higher, together.
On Wednesday, SpaceX rose 7.8% and Tesla gained 3.4%, a tightly correlated move.
Zooming out mutes the correlation somewhat, as SpaceX is up 18% since its June 12 IPO while Tesla is roughly flat.
“There’s been rampant speculation about a merger between SpaceX (SPCX) and Tesla (TSLA) in recent months, and the share-price action of both stocks provide evidence that investors believe it’s going to happen,” Bespoke Investment Group strategists wrote in a note Wednesday.
Musk said this week that both companies have formed special committees to discuss a potential merger, though he cautioned that treating a deal as a certainty “would be overstating it.”
Tesla reported adjusted earnings of 48 cents a share, above the 43 cents forecast, on $28.05 billion in revenue.
Automotive revenue fell 3% from a year earlier, though this just marked the latest reminder that the car business is no longer the whole story for Tesla shareholders.
That’s become as evident with Tesla and SpaceX share prices moving in the same direction, too.
Investors are confirming that they don’t need a signed contract for the two stocks to trade together.
Elsewhere
🚀 Super Micro jumped 9.5% after raising its revenue forecast by $4 billion. The AI server maker now expects fiscal first-quarter revenue of $18.5 billion to $19.5 billion, up from its prior range of $14.5 billion to $15.5 billion. (Yahoo Finance)
🤖 Meta is creating a new class of nonvoting stock. The company reported third-quarter revenue of $64.6 billion after the bell, up 26% from a year ago, and narrowed its 2026 capital spending forecast to $135 billion to $145 billion. (Meta)
📉 AT&T slid 6.5% despite topping profit estimates. The telecom giant posted third-quarter revenue of $32.3 billion and adjusted earnings of 65 cents a share, ahead of the 60 cents analysts expected. (Yahoo Finance)
Rapid-fire
IBM beat on the top and bottom lines and raised its full-year free cash flow forecast (CNBC)
United Airlines rose 4% as its record revenue outlook outweighed higher fuel costs (Yahoo Finance)
Electronic Arts is shutting down BioWare and cutting about 400 jobs (Variety)
Abbott lowered its annual sales growth forecast on softer demand for medical devices (Reuters)
Six Flags stock fell 10% after Mizuho cut its price target in half (Investing.com)
SpaceX closed its 90th trading day up 9.5% from its IPO price while Facebook was down 46.6% at the same point (Opening Bell Daily)
Brad Gerstner sees Tesla stock at $420 to $550 in a potential SpaceX merger (Yahoo Finance)
Chip stocks snapped their longest losing streak since 2008 (Opening Bell Daily)
On this day
🗓 October 22, 2008: The Dow Jones Industrial Average fell 514.45 points, or 5.7%, to 8,519.21 as weak corporate earnings deepened fears of a recession. The S&P 500 dropped 6.1% the same day.
Last thing
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