Transcription
You probably heard the news on X or wherever you get your news if you're an informed Tesla investor. And that news is very, very important because what we saw is a new amended S1 for SpaceX, which goes public on June 12th, which is very, very soon. And what this amended S1, the S1 is the disclosure for the investors into the IPO. What it says is something incredibly interesting, and here's exactly what it is. It's shared by Alexander Mertz. Thanks, Alexander, for sharing it. But here is the news.
Class A common stock, par value. Boom. 2.9 billion shares issued and 2.8 billion shares outstanding. But here is the interesting thing. 36 billion shares authorized. 6.8 billion shares issued. An outstanding performer. So, what we see here, to make a very complicated thing very simple, is that the Class A common stock, they have two classes, Class B. These are Elon's 10x voting stocks, why he controls 85% of voting in SpaceX. And they have these common stock. And these common stocks, they only have 6.8, 8 billion issued and outstanding. So they are basically life, right? 6.8 billion common shares are life. That is SpaceX plus the Class B shares, which are a little less than 6 billion. That is the total number of shares that define who owns SpaceX as we speak. But they have 36 billion shares authorized on the shelf that can be now used to acquire other companies. To acquire other companies. Now, what company would you acquire for six times more shares than you currently have, or let's say three times for the total number of shares? Three times. Okay. Let that sink in. Let me explain why this is so important. Clearly, these number of shares can also be used to raise money, but you're not going to dilute SpaceX by 300%. Okay?
So, these 36 billion shares out of roughly 12 billion in total, including Class B. So, you have 12 billion shares that define what SpaceX is today, and 36 billion authorized. This is so interesting because clearly, it is not for any kind of merger other than Tesla, because no other merger would even require 12 billion shares. 12 billion is a one-to-one merger. If SpaceX acquires a company and pays its entire market cap to acquire that company, it would need 12 billion shares. Just to make that clear. So, any kind of normal acquisition is 10%, 8%, 5%, 1%. Not 300%. Okay. Now, issuing new shares to raise capital, there's also absolutely no way they would even issue 100% of their current shares. There is no way they would do that within the next 10 years. No way. You're not going to raise $1.75 trillion in cash by diluting yourself 50%. So, what are these 36 billion shares for? And obviously, you know the answer. They're for acquiring Tesla. But that is not the whole story when you do the math. Okay? And I did the math for you. I will show you some very interesting math. And that's the purpose of this video to actually go into a tiny little model that I created that is of great interest for every Tesla shareholder. And the model is here. Let's jump here. This time, I'm not going to make the mistake to not show the model long enough because I got complaints that it was too quick last time. Here's the model. Let me explain how it works.
Here is SpaceX current. Here's the total shares. The total shares are 12.86 billion. These total shares of SpaceX, let's zoom in to make this super simple, are Class B and Class A. What is Class A? Class A are common stock, 6.91 billion common shares. They have a voting power of one vote per share. Class B, 5.95 billion with voting power of 10x per share. Elon Musk owns 12% of common shares and he owns 93% of Class B shares. Okay. So, in total, Musk ownership is roughly 50%. Elon Musk owns 50% of SpaceX. But because of these share classes, he has 85% voting power. So he controls 85% of the shares of the votes and 50% of the economic power of SpaceX. I hope that is understandable. If you do the math, that is what you get to, right? He controls basically, here's the total number of votes, by the way. So, basically, you have 66 billion votes. You have 6.91 billion Class A's times 1. You have 5.95 * 10, which gives you 66 billion votes. And Elon controls, you can do the math, roughly 57 billion of the 67 billion votes because he owns 5.5 billion * 10 Class B shares. That is where how we get to this number. 85% of votes is controlled by Elon. Okay.
Now let's look at Tesla. And I will get to a very important point because the very important point in a second is that I can show you that very likely we are preparing for a situation where it's not a merger of equals, but it's a merger of one to two or something like that, one to 2.5, where Tesla shareholders will own the majority, the clear and vast majority of the merged entity. At least that is a very likely scenario, and I will show you in a second why that is. Tesla common stock, 3.7 billion. Elon Musk, 7.17, 100 million of beneficial shares, effectively owning 20%, 19% of votes. Okay. Now let's look at the following. This is the decisive thing, and I will explain in a second what happens in a one-to-one merger where Elon, where SpaceX and Tesla merge at the same market cap. For example, SpaceX is 2 trillion, let's say Tesla is 1.5 trillion. That is the current assumption of everyone in the room. And they're saying, well, Tesla gets paid a little bit of a premium, so we merge. 2 trillion plus 2 trillion, new entity is 4 trillion. Each set of shareholders, Tesla gets 50%, SpaceX gets 50% of the new entity. In this situation of a one-to-one merger, Elon has 81% of the votes, assuming the merger happens only through common Class A shares, which you can be guaranteed that this is the plan. So, the Tesla shareholders only get common shares, and the SpaceX shareholders who have common shares stay common. And Musk ownership economically is three, is 34% of the new entity, up from 20, 19% right now. So, Elon would have a totally controlling majority.
Hey, on this channel, we do something very important. We deeply analyze, understand, and predict capital, AGI, and politics. Not just to beat the markets and make a lot of money, even though that's important, but also to build a new society and make the future good for all of us, the pioneers. If you want to help me on this journey, you can do that by doing a very simple thing. Like and subscribe. It helps me a lot. Thank you so much for your support. And let's get back to the video. But now, let me explain something. Let's zoom in here. That is the outcome that everyone assumes right now. But I figured something out. When you look at the entire timetable of what is to come, June 12th, SpaceX goes public. What happens next? Well, they have to wait a little bit. The market has to digest it. They cannot acquire Tesla right away. They can't even announce it because it would be a violation of disclosure duties. You cannot have an IPO and not say that, and then four weeks later come out and say, "Oh, by the way, we are going to buy Tesla." Because that means you definitely knew that when you went IPO, when you went public, and you did not disclose the plan to acquire Tesla in your documentation, which is very bad. So, you need legally a certain amount of time between going public and announcing the Tesla merger. So, you can legally argue that you were not fully aware and the decision to acquire Tesla or engage in an acquisition process, what had not been made pre-IPO. Because if the decision to acquire Tesla would have been made, or even strongly intended, you need to disclose it in an IPO. The fact that they're not disclosing it means they need to give it some time. They cannot come out of the gate and say, "Oops, surprise. We're going to buy Tesla." Okay. So, that means we have some time. It also is a super complicated operation. It also requires the majority of Tesla shareholders to vote yes. So, if they're pissed, they're not going to do it. And a lot of people say Elon has an incentive of keeping it down, of keeping Tesla down, of delaying all kinds of things because he wants to merge them one to one. And if Tesla gets bigger, significantly bigger than SpaceX, which, you know that I believe it will be bigger than SpaceX very soon, because Tesla goes to three trillion potentially this year. 3 trillion would mean 800 bucks per share, roughly. 800 bucks per share, very likely, more likely than not to happen this year in my opinion. If robo taxi scales, cyber cap scales, all the arguments, all the facts on the ground point to 15,000 cyber caps unsupervised end of the year. People criticize me for that and say I'm crazy. I think the opposite is true. I'm observing the facts. I think this is going to happen. Now, not guaranteed, but I think the time of delays and waiting is finally over because of the forcing function of CyberCap. As you know, if that happens, people argue this cannot happen. People argue Elon is going to delay it because he wants to merge them, and he cannot afford Tesla to go much bigger than SpaceX because how are you going to merge them then? I tell you how. Instead of doing a one-on-one merger, let's assume SpaceX goes public, goes to two trillion, and then my prediction is it drops 25% or something by end of the year. So, we end up with SpaceX being 1.5 trillion and Tesla being 3 trillion when the actual merger can get initiated in 2027. That is a much more likely scenario than Tesla being 2 trillion and SpaceX being 2 trillion. It's a much more likely scenario that SpaceX deflates slowly because they are now getting into a kind of period where they have to build the orbital AI, and this is going to be 2028 and so on and so forth. So, the market will lose patience. The stock is too high and will go down. That is my prediction. Whereas Tesla is very close to the robo taxi revolution and will go to 3 trillion. Very likely. So, the most likely situation in 2027 in the beginning of the year is Tesla at 3 trillion and SpaceX at 1.5 trillion. Okay. What do you do then? Then you're doing something that I call a one-to-two merger. You merge these two entities. SpaceX has to be the acquiring company for many reasons, but mostly because of the voting shares. But SpaceX could just buy Tesla for twice the amount of shares it currently has. And what would be the price of that? 24 billion shares. How many do they have? 36 billion shares. Technically, they could even do a one-to-three merger. That is the only explanation for what we are seeing here. The only explanation is not dilution and capital raises. It's not normal acquisitions. We are talking about a major acquisition that would be able to acquire a company that is valued two up to three times more than all of SpaceX, which can only be Tesla. And so they're mentally preparing for that. And that would be the thing.
Then maybe you say, "Now, but Joe, greedy little Elon, he wants control over his companies. He's not going to do that. Then he loses control." If because he has so little control, he only has 20% control over Tesla. If Tesla becomes the juggernaut and the 2:1 merger here to SpaceX, wouldn't he lose control? And I did the math for you. Here's the comparison. Here's the interesting comparison. Surprisingly, in a 1:2 merger, Elon's ownership economically goes down from 34% to basically 30%. It goes down 5% from 34.5% to 29.37%. Do you really think Elon cares about that? Absolutely not. He does not care about a 5% ownership differential of the new merged entity. But his votes, he would have 81% control over the vote. In the one-to-two merger scenario, he would still have 78% control of the vote because he controls 20% of the big one, but he controls then the vast majority of the 10x shares, which means the differential here is minute. It's about 51% or 66%. These are the critical thresholds, and Elon has total control here, and he has absolutely total control in that situation. Still, even in a one-to-three merger, if Tesla goes to 4 trillion, right, and SpaceX goes to 1 trillion, even then it would be not a problem. Okay. Well, wait, I did it wrong. If, if SpaceX goes to 1 trillion and Tesla goes to 3 trillion, even then he would have a total majority, and that would still be affordable with the shares authorized. So, when you do the math, you see there is no difference between a 1:1 merger and a 1:2 merger. And when you think about the timeline coming up, the 1:2 merger is the much more likely scenario.
Why does this also matter to Tesla shareholders? Because it puts us in a very different position, and there is no risk of anyone voting no. Imagine your Tesla shares go to 800 bucks. Imagine in January, SpaceX approaches Tesla for a, for a vote and says, you know, you have now your 800 bucks per share. You think it's going to go to a thousand and 2,000. Sure. But we have a great company here in, in 2028. SpaceX is going to really start doing orbital AI. So, let's do a merger, and you guys with your $800 per share price, you get two-thirds of this new company. Okay? You can basically acquire SpaceX for only half the price of Tesla. Let that sink in. Who is going to vote no against that? No one. So, you solve all problems at the same time while not having any disadvantage for Elon. He controls the new entity. He still owns 30% of the new entity. Tesla shareholders are all going to vote yes because they got paid on Robo Taxi. They're happy. And the proof that this is the actual plan, or at least a very big option and probability, is the outstanding, the authorized shares. So, I hope that was insightful. That is why I'm not concerned about anything. That is why I'm keeping my Tesla shares, by the way. That's why I'm not engaging in the IPO of SpaceX. I think it's not a good deal, and I think we get it anyway, and I think Tesla will grow more from here. Unless you're already in SpaceX, of course, then you win. But if you go into SpaceX at IPO, the risk that you actually will lose money over the next 9 months after is high on paper. Long-term, I'm super bullish on SpaceX, by the way. If you intend to keep your shares, fine. I just think Tesla is the better option. I hope that was interesting. There you have the model. Always good to do some quantitative analysis so you understand the facts. I hope that was helpful, and see you tomorrow.