Transcription
Okay, welcome everybody. We're live today. We've got Alexander Merz and we got Joe Bacti. We have a very interesting theory that Joe's going to share with you. Something that is incredibly interesting.
So, by now most of you are aware that SpaceX is going to go IPO in June 12th and Friday. And there's a lot of breadcrumbs that are showing that SpaceX at some point will announce that they will acquire Tesla. Lots of reasons why they might want to do that. Uh, but many of us are thinking, saying that if they are going to acquire Tesla, it might be a merger of equals, right? Both companies becoming about the same price. If SpaceX is valued at $2 trillion, then whatever uh Tesla is valued at at 1.3 trillion somewhere in the future, whatever the number is, that they will offer a premium so to make them both equal, both $2 trillion. Well, today Joe believes that he has some other breadcrumbs that he's following and he thinks that it's possible that SpaceX would acquire Tesla at $4 trillion. In fact, if if SpaceX is valued at 2 trillion, that they would acquire Tesla two times worth what they are. So, we can talk about that. That would be incredible for Tesla investors if that's the case. How real is this? So, why don't we start off with you, Joe? Tell us why you're saying this.
Well, thanks first of all for having us both here and great to meet you Alexander. We had some good chats in the past. Let me first uh frame that correctly. So the reason I'm even thinking about that is very simple. It is not a prediction. It's not that I'm saying it will be one to two or one to three or one to one. It is more something about framing the discussion because I think what is circulating on X and all over the place in the community is that people are concerned about the merger. Tesla shareholders are concerned because they feel they have been waiting for five years. Tesla is flatlining, but a lot of things have happened to the company and we are now all getting ready for robo taxi, potentially an explosion in earnings if it scales as you and I believe, Herbert, I think Alexander probably too. And there's a sense of, oh, this would be so unjust if SpaceX now goes IPO at a very high valuation, higher than Tesla from a price earnings perspective. I'm very bullish on SpaceX, but I do believe they will have probably a two-year time lag to actually catch up to that valuation and to really trigger orbital AI that is this exponential earnings potential and Tesla will be first. And so there is this concern in the community that it's unfair a one-to-one merger, let's say two trillion SpaceX, let's say Tesla at 1.5 trillion. So we get 500 billion premium paid. Uh, that is kind of the scenario. And then there are all these rumors connected to that saying, oh, Elon is trying to delay robo taxi. Elon is trying to delay all kinds of things so Tesla share price doesn't go up so much because he wants this merger to happen. That's kind of the setting where I started to inquire a little bit more. How strong is this one-to-one argument for Elon? How important is it number one that we merge, but number two, how important is it that we merge one to one? And so I started modeling this out with how many shares do we have? Class A shares, class B shares with his 10x votes per share for SpaceX. That gives Elon 85% control over SpaceX even though he only has 50% economic interest. How does this compare to Tesla's voting uh share of Elon where the votes Elon has are equivalent to the ownership has 19.09% 09% roughly and what would happen in a one-to-one merger and what would happen in a one-to-two merger, right? That was my thinking to show or to see myself is that even an incentive that Elon has to get to a one-to-one merger and not to a one-to-two merger. And what I saw in the model when I model it all out, it is only a marginal difference in Elon's control over the new merged entity. So long story short. That is why I'm convinced that Elon has no incentive of driving that merger ratio in any way. That is my big takeaway. Elon doesn't care too much if it's one to two or one. That's my first big revelation here.
>> And then why am I even thinking about that? Because from a pure prediction perspective, you guys know that's kind of what we're doing at Pioneer Lands. They're trying to predict the future long-term and short term. I just think it's much more likely uh that SpaceX will, you know, go public, reach 2 trillion, but then has a problem maintaining this price on a nine to 12 months horizon. Just that's what I think because the catalysts are missing a little bit. So it will trend down while Tesla will trend up, potentially very significantly. So SpaceX at 1.5 trillion and Tesla at 3 trillion is in my opinion, directionally the most likely scenario in 12 months, in nine to 12 months. And so that's all the dots I'm connecting here. That's why I think this is just a very reasonable scenario and I think this scenario can actually happen for many reasons. And I have, of course, a lot of unknowns and questions that maybe Alexander can even help with, which is when is this merger likely to happen? What is in the interest of the companies? Is it going to be announced this year and is it going to happen this year or more likely next year? Because for me, that is very informative and important to predict these valuations. But my takeaway is it doesn't really matter what the scenario is. A merger can happen in basically nearly all scenarios. So if Tesla would overtake SpaceX in valuation, that is not a reason that the merger cannot happen.
>> And the other breadcrumb that you jumped on was that in the amendment they shared that they have 36 billion shares authorized. And can you explain a little bit because that is way more than they need, right? And that's like why do you need 36 billion shares authorized?
>> So this is just a breadcrumb by the way. This is not proof of anything. It's just a breadcrumb that I find interesting as someone who was managing a company, was majority shareholder in a company. We had 16 million shares issued and outstanding. If I would have gone to my board and my other investors and would have said, I want to issue another 45 million or authorize another 45 million, they would definitely have asked questions like, Joe, what's your plan? Why if we have 16 million out, uh, you know, outstanding, why do you want to authorize 45 million? So that's the scenario here. SpaceX currently has 12.86 billion outstanding. So the entire company, 100% of the company, you know, is the equivalent of 12.86 billion. So why do you have shelved 36 billion? So basically three times the total amount of what SpaceX currently is worth. And that is just for me another breadcrumb where I'm saying, well, at least they could, if they wanted to, acquire Tesla at two to even three times their own valuation.
>> Joe, you just want to give me electroshocks? Two to even three times?
>> Three times.
>> Wow. Well, that's now I conclude that is the conclusion of my uh dot connecting exercise. But of course, Alexander knows a lot of things and has a better understanding of certain things. So, I'm more than happy to listen to your perspective and see what, okay, what you think.
>> And I then I'm more than happy to share it. Um, and and just so that people understand, love Joe, this is nothing personal. I just try to give my perspective. I am for this merger. I have my scenario. We'll get into that moment. And you asked me the first question, should be when? And see, those are my notes and the first word is when.
>> That was uh exactly where I wanted to start. So, um, when the earlier the better. And I know, I know, don't come running at me. They're all like, "Oh, please. We want robo taxis on the road. We want the share price to appreciate." No, the share price will appreciate. Why do I want this the earliest possible? First of all, for political reasons. At the moment, Elon has the Trump administration in lock grip. And I want this to be used to get to where he wants. And I I want to state also because people go like, "Oh, all she wants is protect Elon." Yes, that is my number one goal. Of course, I will always advocate for Tesla retail shareholders. I am one. I'm 99% invested. But if we don't have Elon, this is all gone. Okay, so this just supersedes everything. I have very maternal feelings for Elon. I think he's the genius of multiple decades, if not centuries. So, I want to make sure we get to protect him. And I've now studied for two weeks the S1, the SpaceX setup, the SpaceX prospectus protects Elon like never a founder has been protected. There are other controlled entities out there, Google, Meta, but none is as protective as SpaceX is in terms of voting rights, in terms of succession, in terms of many, many aspects that, you know, you don't really think about when you invest. Oh, and I also want to insert there, people going, "Oh, Alexandra, explain to us how economically this merger has advantages." There are lots of people, including Joe and and Herbert, who will explain to you very well how economically this makes sense. I think there are very few people, probably I'm the only one who sees this from a governance and financial engineering standpoint. So I will stick to that because that's what I know best and I'll let the other people explain the economics. I completely agree with the economics. I think it, these synergies are much stronger. But don't run into me and go for synergies. Go to Tesla Larry. Go to Joe. Go to CERN. Go to Herbert for those questions. Now, back to to governance. Let me explain you why early and how my Goldilock scenario would work. There are a couple of things happening on the Tesla side. Tesla has two compensation packages for Elon, as you know. The 2025 package that we voted recently and the 2018 package for which we went through toneta and ups and downs and lefts and rights and here we are. Both now end up being restricted stock. The 2025 package, restricted stock, a bit more than 400 million have already been included in Tesla stock count. 400 million that were inserted in November. The 2018 package has in April been announced to be transferred to become restricted stock that he has to hold until 2033 and work for the company until then and all that. But that is a two-step process. And the first process is that he has to exercise his options before August 15th. This is in the next two months. And then that adds 300 million stock because now it exercise becomes restricted stock to the share count. So Tesla's outstanding shares today, the day he exercises latest mid of August, those shares will be 4 billion stocks. That's important. Why? Let me explain where Tesla comes from. When Tesla IPOed in 2010, they issued two billion stock, but only, sorry, they authorized two billion stock, but only issued less than a hundred million. So 20 times more. And you would have had Joe at that moment tell you they're going to buy GM for 20 times because they have authorized stock for 20 times.
>> No, Joe, that's unfortunately not how it works. Nvidia, Meta, Google, they all came out with an authorized stock number, stock count much higher, three times, four times, five times higher than what they really issued because you want to have a buffer to purchase Tesla, of course, but not at the maximum authorized because you also want to do stock splits. You also want to do employee incentives, especially now in AI times. I mean, they are getting already so much, but they need that to retain those those employees. So Tesla started at less than 100 million with an authorized of of 2 billion. That was enough until 2022 for 12 years. And for the first stock split, that was enough. Then at after the first stock split, you remember, was it five to one the first one? Um, we reached 1.3 billion and then started employee uh actions and all that and people were screaming for a second stock split. Before we could do that second stock split, we had to increase the number because we were at 1.3 billion outstanding, two billion authorized. You can't split because if even if you split just two to one, you need it to increase the authorized. So we did that. We did that in the vote of 2022. You need a shareholder vote to increase the share count and that's why you want to put these share counts high up so that you don't have to go back to your shareholders all the time and ask for reauthorization of issuance allowance. Okay. So all this to say, Tesla is the best example that you can have 20 times the authorized number and still don't acquire anything or inquire acquire little stuff and you don't need to fill up that gap. You can have that gap running for 12, 13 years and then sometimes it will run out of space to do what you want to do. In this case, the second stock split and you will go up. So at the moment, Tesla has a six billion authorization and after these exercise of the stock options, we will be middle of August at 4 billion. Now to my to my when answer. When might this merger be announced? For this stock option exercise to be the most financially advantageous to Elon, Tesla stock price has to go up. The higher it is, the less he would need to either sell or net. I think he will net or he will get a loan for it. Whatever it is, the higher the Tesla stock price, the less it will cost him. So, I think that is the first breadcrumb that brings me to the August 15th date. I actually think it will happen between end of July and August, the announcement after the SpaceX IPO.
>> Wait, Alexander, can you can you first uh quickly explain?
>> Oh, first of all, let me just address the 36 billion thing. As I said, this is not proof it happens. It it's not proof they're going to use all these shares. And of course, they don't need to use all these shares, but it's an indication if they needed to spend more than 12 billion, let's say 24 billion, it's already authorized. They don't have to go back and ask the shareholders, even though they.
>> They don't have 24 because they're already at 12.8 as you pointed out. They are going to issue for cursor. They're going to issue for Echoar. So they're already way out over the 12.8. And now if you do 2:1 at equal market cap, you would need more than 36. So you don't have the space because all these, you know, you would need more than 26, 12, now 13 would need 26 to make a 2:1. Okay, we don't have.
>> Well, the Aist star and cursor are completely marginal, that's 3%.
>> They're marginal, but they bring us over to 13 billion stock.
>> Yeah.
>> And so 13 and you want to have two on the other side. So that's 26 plus 13, we would be at 39. There's only 36. So the 2:1 doesn't doesn't hold. Two to two to 1.9 or something. But anyway, so can you explain, but that's very interesting to me. Can you explain why you're saying higher Tesla share price is actually good or is better for Elon? Can you explain that?
>> So he, the exercise of those stock options happens in two phases. The first one is, everybody relax because I know we've had exercises before to pay taxes and whatever else and it always gave a shock wave to the market because Elon needed to sell to purchase uh or to pay taxes. This is not it. The tax event is in January 2028. We can sweat then, but don't sweat now. We have enough other things to worry about at the moment. This is just the bureaucratic exercise of him purchasing the shares at 23. Then it gets transformed into RSUs, restricted stock units. The process of that costs 7 billion. He cannot sell SpaceX. Okay. So what can he do? He can sell Tesla for 7 billion, and they're obviously the higher the better. Or he can do a pledge there. Again, the higher the better, the less he has to pledge. Or he can do what is called a net exercise. Meaning, let's use approximate numbers. He actually exercises 300, needs to pay 7 billion. But Tesla lends him the 7 billion because he pays them with stock. So he ends up, let's say, with 290 billion. Okay? And that delta between 300 and 290 is smaller if the current price is higher. So in all three scenarios, a higher current Tesla price is advantageous to him.
>> So wait, Alexander, the big package that Elon has, right, that he might get in the future if Tesla hits all these very ambitious goals. Does this package get accelerated in a case of a merger or does it?
>> Oh, wa. You're going five chapters ahead. Wait, wait, wait. Slow. So we, we, I promise I'll address that. I promise I'll address that because I have that, I have thought through too many times actually, as many times to actually counter-argue myself and then come back to my original theory. But.
>> Oh, by the way, Alexander, since we have you here, there's another huge question that concerns everyone, which is a more tactical question, and that is leap call options on Tesla. Uh, I did some research on it, but I'm not totally sure. I don't know if you know the details.
>> No, you have to go to James. Jamesa explains that part very well. I I really want to make once and for all clear. I know what I know, but I also know what other people explain better than me, right? So, I do believe I'm really good at governance and financial engineering and all that, but I also know who is better at explaining other things. I'd never go to me for supply chain. I'd go to Jeff, right? Um, for for options and how to trade that long stuff and whatever, go to James. For economics, my first person to recommend is Amy. She thinks this through strategically and synergies and whatever, please go to her. If you want to have a really good view on SpaceX and how this all integrates, Larry. So, I I just don't want to have this head that I know it all because I don't, you know, I I can. And CERN, I mean, CERN in financial projections, it's a beauty. And then if you want the most good-looking, you go to Joe. No, sorry. You go to Herbert. No, I'm just joking. So anyway.
>> Both of us, Herbert and we are the power, the power.
>> Exactly. So, so I just want to make sure I I answer where I did my research and you can, you know, take it to the bank. And again, always with the caveat, I may be wrong, but I did what I could to research it. But on the other topics, I also want to refer to other people who have done their part. So, um, going going to the when question, Trump administration, his own option cycle, and then more importantly, is the time a merger will take, getting this merger to final approval. So, because there are two main moments in a merger, the announcement, well, actually three, but let's start. The announcement and then when it actually merges and there's only one stock ticker now trading the combined entity. In the middle is a shareholder vote by Tesla. Could anybody else than Elon attempt what I'm going to say now? No. Does that mean he will attempt this? I don't know. But he's crazy enough to try. What does that mean? There have to be a couple of weeks of SpaceX trading already so that the price settles. And as we know, they're going to be horrendous forces working on this price. They're going to be the three big index inclusions, MR, um, Footsie, CISP, and NASDAQ all in the first 15 trading days. But they are not doing everything now because the float is going to be so small. It's 4.3 plus maybe these 5% of friends and family. The big lot of fresh lockup period sellers is going to come after the Q2 results. So that's second half of July. So but then they cannot adjust those indices. Indices are rebalanced as we all know, once a trimester. So these three indices will have a major impact in the first three weeks and then they will have another impact at the rebalancing in September and in December. Okay? Because they will adjust every time to the floats then. So it's not a one-off for these three. And then comes the big one, which is middle of December, the S&P inclusion, which could go into 100 plus billion purchases, bigger than the Tesla 2020. Who was there in 2020 has not forgotten what that means. So we're actually going through three phases of the initial three, and then comes the biggie. So we're having six, seven months of continued forced purchases. And the numbers I throw out are only those that are passive index funds that have to do it. You have to add to that all the active funds, but obviously they are much less predictable. But these amounts are really higher than we think. At the same time, they tried to put the lockup periods in steps to sort of help with this. But this is, you know, this is finger in the air, trying to do your best. This is you can't time this the way you want. So, what I'm saying is that price will be shaky, but most likely uptrending just because the the power of these index funds. I hate index funds. You all know I've been talking about years how I hate it. But this now really shows, you know, why they are so dangerous. They look cheap. They give the voting rights to these entities, but also they have a power that nobody can stop. They just roll in there now. And the index makers are even worse. But anyway, so let me just add as well, we do not know the S&P response yet. They did a public hearing. We're waiting for that any day now. um, whether they will do that accelerated six months inclusion, which would then mean middle of December at lower floats than they usually require and completely waving the profitability um topic. As soon as we know that, we know that December will be another wave. So for the SpaceX stock, while it will be shaky, it will most likely uptrend. Okay. And the numbers you now hear, the whispering numbers go into the three, four trillion. I mean, I'm sweating it already, but I'm cheering it on. Why am I cheering it on? Because I do believe that the offer is going to be highly unconventional, but not un-impossible. The offer is going to be SpaceX is proposing to purchase Tesla at the same market cap. So if I, and they will say we're going to weigh it over three weeks or I don't know, you know, there will be a formula, but there will be something that is.
>> What is the rationale like that it has it should be one to one? Like why not one to 1.1, 1.02, 0.9?
>> It's going to be, first of all, it's going to be easier to convince everybody. I mean, as you know, it's not going to be complicated to convince anybody on space except because there's only one ruler, right? It's not a dictatorship, but it's an it's an emperor if we want to call it.
>> Let me ask you a bunch of questions for the technicalities that are very important for the economics. So let's say, I don't know, August 15th or something is the announcement where they say, boom, here's an offer. So let me first understand this. Let me ask very specific questions since we have you here and everyone asks these questions. So, okay, August 15th, they want to announce something. Obviously, they cannot announce a merger. They can announce an offer because the shareholders have to vote on it. So they say, here's the offer. The the most important question for me is when is the vote? Can that vote be at any point in time? Probably. But then you need still to organize the process, right? You need to do a little campaign because people need to know that they need to get ready. So there will be some delay. What is your take on it? Because you can't just wait until November if you do it in August because all kinds of things can happen.
>> But you need to. Oh, no, wait. So, so this is, I mean, first of all, I think this is starting to bake for a while now. Herbert and me have done a couple of analysis that we actually, I think this has been starting to be prepared for at least a year. Okay. Now, not prepared in the sense that it needed to be included in into the S1. Alite, they're saying very clearly in the Alite, we want to acquire with those shares. So they they made it very clear. So the announcement then follows some experts, you need some investment bankers to have fair value evaluations, is this fair? And you then need the boards. Now, SpaceX board, I'm not worried about because it's a controlled entity. Like I said, there is an emperor.
>> Wait, let me let me understand when you say why do you need to assess if it's fair? I mean, the shareholders.
>> Well, that's just the way it goes with mergers. You need fair value evaluations. You need, you need to provide proof that professional experts in exactly this field consider the offer fair. So there you have lawyers, you have bankers, that this is a quite something.
>> But of course, no one, I mean, that I wouldn't, I don't care about these people. Like I said, if it's fair.
>> Well, you don't, but that's the SEC. Those are NASDAQ requirements. Those are there. There is more than just retail investors for that. So anyway, so that goes for a while. And then the board has all this because, you know, let's be very clear, the, can I say this word, cover your ass, uh, in this whole process is super important. You know, everybody involved is going to say, oh, I have this from this person, that's going to reassure me on this. So there is a lot of there is a lot of um, I need an expert. So I am not the one saying it in in this whole thing. Special committees, okay? There will be a special committee on Tesla's side. There will also be one on SpaceX's side. But like I said, the SpaceX side, you, you with a 10 for one voting power, we can ignore talking about will this pass SpaceX. But what is important is actually Tesla's board and Tesla's board may actually come up with conditions. I laid out yesterday a couple of uncomfortable things in the S1. One thing I'm uncomfortable about is that the full 10, the full class B shares, if Elon should pass, are given to his family members. I'm uncomfortable about that. Meta and Google have in theirs that their super voting shares go back to normal shares if they get incapacitated or or die. Okay. In Elon's case, he wants to hand them down to his children. I love children. I made five myself. But I I feel that's a point that Tesla's board should address because there, like I said, this is also a negotiation. And the board of Tesla is representing us. So, this may be something they want to look into and say, "Okay, we could agree to this. Would could be agreeable to this merger, but we would like a clause where it's not automatically going to your family members, but there is some succession planning or whatever else, right?" So, so there are stuff that can still be discussed in that period. And then Tesla's board issues a proxy, a proxy with a date of record where you have to hold shares to be able to vote, not options. So all those holding the leaps, it's not your leaps that are going to come like. And then there's going to be a vote. In that vote, you need 50% of outstanding shares. So it's an uphill.
>> But that vote doesn't need to be at the shareholder meeting. That can be scheduled any time. Right?
>> It can be at any time, but I do believe the earliest it could be scheduled because a proxy has a six-week minimum publication period for this size of of companies. For smaller ones, you can do shorter, but this size, you need to give the time. And especially Tesla is the biggest, well, maybe now soon SpaceX, but up to now, Tesla is the biggest retail shareholder participation, right? More than 10 million retail shareholders worldwide are there. So if you want to make sure everybody can vote, you have to give them six weeks.
>> So I I get it. So there's a six-week time and everything. But here's what I don't understand, Alexander. I want to be very specific because, you know, you're the master of governance, but I am my own little master of money. So from a money perspective, what I don't understand is if August 15th is the offer and November is the vote, and what is that offer? Let's say it's a one-to-one offer. Let's say, let's just assume Tesla at 1.5 trillion at that moment of offer and SpaceX at 2 trillion. The offer is one to one, saying, okay, we buy Tesla for two trillion, right? Not or that's the first question. Is it for two trillion or is it for the market cap of SpaceX at the moment of execution?
>> There we go. Now you're getting there. Exactly.
>> Questions for me as Tesla. Like, what happens if between the offer and the execution, SpaceX drops to 1.5 trillion and Tesla goes to three trillion, saying it happens, it could, like, whatever happens in between, how do we handle that?
>> That is exactly the right question. So if it is announced, how I think it is, again, that's unconventional, but I'm still thinking that is it because that's why I'm so fixated on share counts and everything. Okay, then the announcement is at equal market caps. And let's say we have, let's go very extreme, just because with extreme numbers, it becomes clearer. By then, SpaceX is at 4 trillion. Okay, I know it's not, but just at that announcement, Tesla's share price would immediately jump.
>> But I would pick on that because there is a huge unknown. The unknown is.
>> Let me finish, please.
>> Are they going to vote yes or not? No one knows that.
>> Exactly. So it depends on two. So it would immediately jump to what level? If the certainty is that the vote will pass, excuse me, at 4 trillion, it will pass. If anybody's stupid enough to vote no at 4 trillion.
>> Well, but Alexander, it needs to be four trillion at the vote.
>> Well, let me get there. Let me get there. So if it is at equal market cap and SpaceX at that moment is at four trillion, and again, please don't quote me and any journalist, I'm not saying it's at four trillion, I'm just doing this as a thought exercise so that we have a high number and a low number, and Tesla was at 1.5. Will it catch up to four trillion? No, it will not. Because actually, SpaceX at that moment may come down a bit. Okay, let's say for the thought exercise, it comes down to three. And Tesla doubles from one and a half to three. Now they're both at three. That That would mean people believe the vote goes through because now they're at equal market caps and everything will happen that way. Okay. I do believe the market will actually be more confident in a yes vote than I am, always, because I'm just so over nervous about these votes all the time. Right. I do believe, and and people usually don't even understand that it takes 50% of outstanding votes. You know, in our circles, we have mastered this because we went through it so many times. But the the normal investor, institutional or retail.
>> But Alexander, I I get the whole point. My problem, my issue with this whole thinking or planning is this is all pending on one giant assumption that I think could be wrong. There are reasonable scenarios where this is just wrong. And that assumption is that SpaceX is significantly higher valued than Tesla.
>> Well, now let me just finish my first one, and I get to that, and you are right, that is the risk. There's nothing that is guaranteed here. So it would jump to three, and from that moment on, so three for a 4 billion shares outstanding, Tesla price is how much is, let's say, a thousand. Okay, let's just um.
>> It's double what it is now.
>> Exactly. And on the other side, 4 billion would be triple what it is now. So it would be, whatever. So it doesn't mean the stock price is the same. It's the market cap that is the same. But from that moment on, there would be what is called merger arbitration. Meaning both stocks will move in lockstep. And.
>> Wait, wait, wait, wait. No, Joe, you don't. Let me finish. You never let me finish. Please let me go through it until the end, and then you can bring all your. And again.
>> This is my Goldilocks. This is not sure to happen, but this is what I think might happen. So three and three, and then they lock and then they move together. Now, move together means a rocket explodes, it goes down. Um, lockstep means suddenly there come doubts that the vote goes through. Well, and then they decouple. Or it could mean robo taxi now launches and then Tesla pulls stock, uh, SpaceX. Or it means comes the next index fund inclusion wave, SpaceX pulls Tesla. So they will pull each other ups or downs. You now have to consider both news for both stock prices. Then comes the vote. If the vote is yes, it's not done yet. Then come regulators. But that's why my scenario is it has to happen soon because at the moment, regulators are favorable. Okay? Because it takes one regulator that, whatever. And my open questions during all this period are Tesla China. I still have no answers. You know, I think this through. I don't know whether this can be firewalled or not. I don't know. And then obviously, succession planning and these class B shares in case of. So those are my current questions. But now, please bring your critics.
>> Okay. Uh, I have some commentary on the economics. That's like my field. So there I'm going to push back a little bit before I have a question to you on the politics and Trump and everything. Why do you think it's so important to do it before the midterms? Do you think like normally there shouldn't be any changes in the administration, even if the Democrats win, right? I mean, there should still be the same SEC chair and everyone like overseeing FTC or whoever's in charge of mergers, like making sure this is like fine. So isn't that, you know, wouldn't that be safe for the next two years independent of the house?
>> I mean, if they lose both house and senate, everything, you know, all committees, everything gets difficult. And impeach, they can just, you know, they can call special committees, they can call Elon in to testify. It just, I do believe Elon is a target. And I do believe Democrats understand very well if this is a merged entity, Tesla as a target does not exist anymore. What they did to us 18 months ago would not have been possible if Tesla was part of SpaceX. I mean, SpaceX obviously was private then anyway, but nobody is going to touch SpaceX. It is so critical for America's defense. So, I, I have now, will it be consumed before the midterms? In no case, because after the vote, there is still four months minimum, probably seven months to get all regulators in line. Will it be accelerated because he has friends in the administration? I hope so. So my my scenario is that a real replacement of the tickers and one entity being born, which probably has the X ticker because nobody knows where it is anymore. Um, Q2 2027.
>> So we basically have, you you're saying there is some kind of a just a risk percentage coming in, like if we wait beyond the midterms too long, it just increases risk, 5, 10% or something. It's not a clear problem. Okay. Now, let me get to the economics. Here's the issue. So, I would agree that they start moving in lockstep, but only as a ratchet, only in one direction. As long as SpaceX goes up, yes, it pulls up Tesla because SpaceX going up means the deal remains attractive. But if Tesla overtakes SpaceX, it decouples because the vote would turn into no. If I'm a Tesla shareholder and my shares are at 800 and the offer is at 600 effectively translated, of course I'm going to vote. Why would I vote yes? I mean, maybe I would vote yes because I'm crazy and I believe Elon knows what he's doing. But normal people, they would say, are you crazy? My shares without SpaceX would be 800 now or 900 because something big happened, robo taxi, whatever, and SpaceX dropped. So now you want to buy an $800 share for 600. That's.
>> That's not how it works. That's not how it works. Currently, we're at 420. Okay, let's just say we continue at 420 and the SpaceX price skyrockets. Okay, and they announce it. And actually, just as a little parenthesis, I don't think Elon knows when he will announce it. He wants to see how that SpaceX price evolves.
>> Yeah.
>> Because he wants to give it as high as possible in a real moment of euphoria, announce it. Okay. Well, but that doesn't hit because it needs to be a moment of euphoria when the vote is.
>> Just saying.
>> Then.
>> Announcement is fine.
>> Tesla goes up, then Tesla. So, one thing you should research before you do next video screaming about that because I can already see it coming is merger arbitrage hedge funds. Okay? Because those are the ones that are actually the major players in this coupling or decoupling, right? They are they are the ones doing the dirty job if you want to do so. And and you are right, there is stuff that could lead to certain decoupling, but not not triple underlined where the retail shareholders might vote no. This vote depends on retail shareholders, but by far not as much. It depends on Elon, 20% of outstanding shares, and it depends on BlackRock and Vanguard. Vanguard is already in SpaceX and in Tesla. So I do believe they are on Elon's side. BlackRock has expressed that they want to have 10 billion of the IPO now. So I do believe that plus ARC plus Baron plus a third of retail will bring us over the line. Okay. So whether Tesla retail feels like, oh, uh, now Tesla by itself should go up or not.
>> Is it 50%? But but but damn it, please. Um, but Tesla retail shareholders suddenly having 800 on their screens. Do you really think they're going to say no? I'm going to go for no. I may go down to 420 again, but I think 800 is not as nice as 900. When you have all the time now index funds pulling and Tesla going up for no reason, no more robo taxi on the street, just because SpaceX pulls it up. I think that the key to it, this all was understanding what they were doing with these index funds. I mean, you have the bears screaming. Let's say, Alexander, we can we can separate these issues. First question is, is it 66% or 50% needed?
>> 50. 50 plus one.
>> 50 plus one for a merger like that.
>> Yes. 50%.
>> But it's it's all shares though. That's the problem.
>> Okay. Okay. All shares. Yeah. Okay. 50% plus one of all shares. So I want to push back. This is not about retail. It's about anyone who understands economics and has no alternative ulterior motive because they're also heavy investors in SpaceX. So that includes some retail, that includes some institutional. They will all think the same way. They will think economically and they will think, I'm not going to vote yes on a merger that underpays me at the moment of vote. And if SpaceX is at 2 trillion, three trillion, whatever, it becomes very easy. But if anything happens and SpaceX goes to 1.5 trillion and Tesla launches robo taxi and scales that and we go organically to 600 or 700, you have an imbalance. That's the problem. And I'm not.
>> I do. Good news. I do believe the good news on both sides. And I give you SpaceX's good news are mainly going to be these index inclusions. I know you want to, but they are real. Uh, and and Tesla's are much more tangible. Flying Roadster, the bot number three, bot version three, the robo taxi rollout. But they will play as ladders. They will, the Tesla good news will pull up the SpaceX good news. The SpaceX new demand will pull up the Tesla good demand. I see the next six months, the most glorious six months coming. So I'm, this is not a discussion about what I think will exactly happen. It's a discussion for a specific scenario that could happen where SpaceX is basically clearly below Tesla, right, intrinsically. And I'm not saying that is what I believe will happen. I'm just saying it definitely can happen. And in that case, there's a problem. That's all I'm saying.
>> Well, can, can a, a smaller company, SpaceX, still buy a larger company, Tesla?
>> No. I mean, next question for Alexander, like if they make an offer, they can change the offer, right? Short term. If they make a one-to-one market cap offer, they can't, can they adjust it before the.
>> They can adjust it. Yeah. There will be discussions. There will be sessions with the bankers, with the board of Tesla, of course. I mean, do I think they will prepare that offer already having heard some comments? Yeah. But do I also think that there will be comments coming afterwards? Of course. Yeah.
>> When do they actually have to tell you?
>> Once it's in the proxy. It's in the proxy. Once we have a text in the proxy and then the other point.
>> You need to see the data, right?
>> So when when they make the announcement, you believe it's going to be in August 15th or mid-August because you think that he needs to have it prepared before the November shareholder meeting, and that's when we'll do the vote. But if he makes the announcement, that announcement could simply just be, we have an intention of the two merging. And then only when the proxy comes would they have the actual data, like the actual intention of the.
>> The equals heard it. I I mean, this because, you know, this is highly unusual because it's two companies I have to controlled. Tesla is not controlled, but controlled by the same person, right? So you have to, this is not Daimler Chrysler where you have two different entities. This is where you have two brothers, two siblings, sorry, brothers makes straight away strange scenario, two siblings moving in together. So.
>> Sorry about that.
>> But it's, uh, so I don't know how firm the details of the announcement can be. And and Warren made actually a good point a couple of a couple of weeks ago. Does this mean nobody else can make an offer? Tesla is very attractive to many others.
>> So if another offer comes on the table, you know, does that delay all the things that that put the board in a very awkward position? Of course, everybody would like this to merge, but really.
>> That's for me not the main concern. For me, the question is also like, I am not convinced that this makes sense. The procedure. And my concern is if you come out mid of August with a one-to-one merger market cap, one-to-one offer, I think it's too crazy. There are too many things that can go completely wrong. So the question is, can they make a more dynamic offer? They can they.
>> Can there are cups, there are colors, there are colors, there are. I mean, that it can become much more structured. It can become much more structured and it can become much more precise. Okay, yeah, there have been offers where they say a minimum of this price and a maximum of that price. That is all possible. Okay, but that goes even more into guessing land. And I just felt much more comfortable with this market cap again. And let me also, let me also, let me add one more. Let me add one more breadcrumb because I'm always very transparent. So this has been going in my head for months. Okay. I saw things coming. I thought, oh, this is strange, but whatever. And didn't have much information on the SpaceX side because it was a private company. And and so retroactively, lots of things made sense, but at the moment, it was still still very vague. But one thing I, so I sensed this merger like many did. I mean, it was Elon saying, oh, my company suddenly converge, joking, right?
Um, so, so it wasn't, as you know, I wasn't inventing anything. They were clearly breadcrumbs. And then, and Herbert knows that because I was going on and on in my pedantic German way about, what's the share count? Because, like I explained at the be, I mean, I know >> Are you saying I'm pedantic? >> No, no, I am. I'm so, um. So the, the, the, the thing was, I knew the 2025 400 million had to be inserted. I had no clue how they're going to do it with the 2018. So now, suddenly in April, they made this agreement and suddenly the share, uh, the, the stock options had to be exercised 15th of August and all that. All this is constructed, right? There was no need to do this. And then all these index tightening, bringing them closer, float requirements suddenly unleashed and stuff like that. I was coming back to the share count. I said, okay, if this is happening, what's the share count? Because if you do it on market cap, you need the share count because what is a market cap? It's number of shares times current price. So the, the number of shares is prominently important in this whole thing. So I kept going back to Tesla official, I mean, official emails from my account to them saying, what's the share count? What's the sharehold? What's the sharehound? No answer. No answer. And then at one point, I just said, stop asking about the stair price. I said, okay, I stop asking. So there is something there, right? That does, is that a breadcrumb? I don't know. But >> I, I think like, I, I can just give you my, my, uh, math perspective. I think first of all, the lockstep theory, you can forget. The, the function of the share prices will be a function of the deal offer, right? That's how the market will behave depending what that offer is. And I think that offer needs to be somehow dynamic because it needs to, you know, take into consideration these scenarios. If you have 2 trillion, 1.5, 5, whatever it is, at the offer time, SpaceX can go up and Tesla can go up. SpaceX can go down, Tesla goes up. Tesla can go down, SpaceX can go down. So these are the scenarios you have to deal with. And, uh, that is what the, whatever, who's in charge of lockstep, like the market will look at. So I think there needs to be some form of dynamic formula that says, here's the acquisition offer, right? And that is something mathematically challenging that I'm sure they will have very smart people figuring out. But I'm pretty sure it will be some form of dynamic offer that takes that into consideration. And that will be interesting. And that will determine how the shares trade because that's the economics behind it. >> I, the only, once we're in lockstep, once we're in lockstep, I want every morning a post from you. I present my apologies. Okay. >> Sure. Well, if unless they come up with a formula that is a lockstep formula, but that lockstep formula can definitely not be a one-to-one market cap. So, if they come up with some dynamic lockstep formula, that is probably possible to come up with, but that thing will be more complex. >> Now, let me, let me sum it up. We did debunk your two to one. Okay. Can we agree on that? >> No, no, no, no. >> So, go ahead. Don't, don't tell us how. >> My, my one to two was not a prediction. This is going to happen. It was saying there must be a dynamism in here because we have to account for these scenarios and it can, it will not be a fixed one to one. It could be anything. It could be one to one, one to two, one to three, or one to 0.5 depending on the dynamics of the stock. So my real takeaway from that was a one-to-one lockstep is probably not going to happen because that wouldn't work. That would introduce massive risks for the deal, like massive. >> Is it possible that SpaceX decides to buy Tesla, but Tesla's worth more? Let's say, let's play with this idea that it's one for every one SpaceX, you'll buy two times whatever the price is Tesla. Is that possible? And then maintain the share structure, the class B shares, the class A shares that he has? >> I mean, in any case, as Tesla shareholders will only get class A, right? Class B is reserved to >> He maintains his structure that he gets to control the company, the, the merged company because that's what's most important. >> He will still have by far, uh, the majority of voting rights, by far. >> And Joe's calculation was that if in that weird scenario, stu, crazy, wild scenario that SpaceX buys Tesla two times its price, so let's say that the, we're at 1.4 trillion, they'll buy it at 3 trillion. Tesla at 3 trillion. If he does that, Tesla's his calculations show that Elon's combined share of the entire combined shares only down by 5%. So it's not a big deal. >> His voting rights, his voting rights don't lose a lot. >> Don't change. But his ownership also only go down by 5%. That's what he's pointed out. 35% to 29%. >> Yes. >> I mean, by the way, let me ownership, which is, which is not a big deal for him. Also interrupt here just to give you an example of one deal that would make more sense. For example, if they say we have a one-to-one market cap acquisition at the point of vote, but a minimum total absolute number. So we do a one-to-one, but at a minimum 2.5 trillion or whatever, at a minimum a, a 50% premium over current Tesla market cap. And if SpaceX falls below that, they need to have a not one-to-one, right? Because at that point, you have certainty and then you have lockstep. Then the Tesla share will say, "Okay, now we drive the stock to that point because now everyone knows we're going to vote yes." And then you're right, Alexandra, but that can only happen if there's a ratchet situation. The Tesla, you cannot go into that with a risk that SpaceX falls and drags down the Tesla acquisition because then people will vote no. And that's so I think if you offer one to one, but guarantee a minimum of let's say 2.5, whatever, 2.3 trillion, 2.5 trillion, so you know Tesla, okay, fine, now I'm getting 750 minimum or whatever. SpaceX, if SpaceX is worth more, I get more. And then you have a don't, then you don't have a lockstep, you have basically the Tesla share going to that price because it's guaranteed. I mean, I'm not saying you're not right. I'm wondering whether that's in the spirit of what a stock market should do. But again, I do not know how they will formulate it. I do not know whether they will put a floor to it. I don't know whether they will put a collar to it. I don't know. I do believe the higher SpaceX goes, the better the offer will be. Well, if it stays there, >> that's the problem. And it will, you know, how the market is right now. I'm just pushing back because it's so crazy, right? It will get >> I just want to reiterate, I would love to finish some sentences. I and I just would like to reiterate the setup what they put in place for six months. You know, this is not random. These, how the lockup period comes down and how the index fund purchases go in. This is not random. Indexes have been changed. Remember 2020 when we all wanted S&P to take to include Tesla for multiple quarters. We were screaming, we're having all the conditions, why don't you include us? And S&P didn't move. Now all big index makers changed their rules completely, softened their rules completely for one IPO. Of course, they are saying it's for OpenAI and and Anthropic as well, but those are not on the list yet. Right here we are. So knowing what we learned and knowing what Elon learned since PayPal, the IPO, Delaware, the 2020 index inclusion, Toneta case, whatever else, the way they set up the S1 prospectus to protect him in every way. And the way they set up these initial six months is not only for SpaceX to rally. They don't need SpaceX to rally. SpaceX two years ago was 250 billion and is now probably two trillion right before we finish this show and who knows how much next week. So that is not the main driver. The main driver is get SpaceX much higher consistently over many weeks. And why do they do that? And that's how I got to my conclusion. All I'm saying is I think they need to put in a ratchet, meaning a guaranteed absolute dollar amount if they want to have certainty on the Tesla side because if they don't do that >> Wait, wait, wait. On the Tesla retail side, the institutions understand this. >> Institutions, no, no. Institutions will act exactly as I say unless they have significant stakes in SpaceX. Then they have a different motive. But if you're a pure Tesla investor, including institutions, they will all think in basic economics. They are not going to agree to getting acquired below their market value. >> So, give me the four that it takes. Vanguard, BlackRock, Arc, and Baron. The last two more for opinion making, the first two for real money. They all have significant stakes in both. >> Yeah. >> And even by the way, yeah, >> They still have to fiduciary duties as Tesla shareholders. By the way, just to be clear. >> Yeah. Alexander was never saying I don't believe that she's been proposing that it's got to be a one-to-one. That that that merger of equals thing was other people who proposing it and convinced, uh, others that said, this makes sense for us. But the her point is simply that there's going to be an acquisition. That there's too many breadcrumbs to say that that's not been planned. And B, she thinks, which is wild, saying that it might actually actually be announced by August because it has to be, uh, the, the November has to be the Tesla shareholder vote. And that's it. And then if you look the six months from July, June 12th to six months, that's when the S&P inclusion, you kind of have a little bit of guarantee, not guarantee, but you know, a little bit more floor that you're not going to see the stock fall. It'll go up and down, but, but as it gets closer to November, >> I'm, when you know that in January, you got a huge buyer that's got to pay by buy. It's going to go up in November, December. >> If you don't put in a hot ratchet in >> No. No. Yeah. So, I think we agree, both of us probably agree that your model, we don't know how it's going to be structured, but I think you made a good point. It probably could be structured the way you're suggesting, not a one. None of us here are saying that it's Yeah. If you guys are right and they keep SpaceX up there, the ratchet doesn't go into effect. They will everyone gets what they want. The ratchet is only >> They have to convince the Tesla shareholders to con to do it. And it's going to be November. And and this is just incredible because you guys are throwing in a bunch of, uh, breadcrumbs to guess what. >> You are the also the master of governance. You know, you cannot force minority shareholder to vote to override their interests if it's clearly against the economic interest. Right? If you force a merger below market price, that's not good. Even if you have the majority. >> What, what I like about Joe's proposal is that you've heard Elon say many times, I will take care of you guys. I will take care of you Tesla. I will, you know, do you shareholders who've been there. This is his way because he controls SpaceX. He can buy Tesla at whatever price he wants to buy Tesla. And then you do need to give a premium in order to convince the shareholders to agree to it one time. Once you agree that he now controls, he now controls his combined entity forever without any needing to get any more shareholder again. >> I mean, I, I tell everybody, I will be unemployed once for SpaceX. >> We don't need your governance analysis anymore. >> And by the way, maybe this helps, maybe these discussions help because you know how it goes. They have smart people, but sometimes they need some input. If, let's assume Alexandra is right and they have the share price of SpaceX kind of under control with all these funds coming in, so it, it doesn't go down, my proposal here would then not change any economics for them, right? If you go to three trillion or 2.5 trillion with SpaceX, then you do the ratchet and say, this is the guaranteed minimum price and SpaceX goes up from there. >> Yeah. They don't need to guarantee they'll buy Tesla at 2.5 trillion, which is where 1.5 and the guarantee advantage is then everyone is going to vote yes. And then everyone knows they're going to vote yes. And then the stock price goes up. And then no one knows anymore what Tesla is worth. And then you have yours lockstep. It's not a lockstep. >> You certainly want to let the upside run. You don't want to lock it in with a fixed price. >> Yeah. A ratchet. You have the upside but not the downside. I think what they normally do, don't they, Alexander? Don't they say something like this? Like, whatever the stock price is of the company that I'm going to acquire, I'll do a 30% premium on top of that. >> Whatever it is. >> They're going to go with percentage this time. But again, >> Delay, right? At what point in time? >> No, at the time of purchase, so that you can convince the the people to invest. >> No, it needs to be at the time of offer, otherwise you have a game theory problem, right? If you say >> It has to be at the time of offer. Exactly. It has to be at the time of offer and it has to survive the couple of months until the merger. >> Yeah. >> Can, given, given everything you guys talked about, what is the expectation for Tesla's rollout? Because robo taxi rollout could happen. Uh, we seeing all the cyber cabs. We're going to see this maybe get, let's give it three months from now, the stock, you know, tremendous growth and it just, it's just spreading. And then they show the Optimist reveal, give that in September. What happens to Tesla stock at that point? I mean, the good, I think the good, let's play this through because it could be helpful even for Tesla, basically, if they're watching. So the good news is, if you make a good offer in August, right? Let's say Tesla's at 500 in August and you put in that ratchet offer, whatever that you get one-to-one with SpaceX, but at a minimum 800 bucks per share or whatever it is, 750, then I think you win as SpaceX because then Tesla stock goes up to 750, not lockstep, but then it's frozen and goes up if SpaceX goes up, but not below because it's guaranteed. And then no one knows anymore what Tesla would be worth if robo taxi scales, like if it would be worth more or less, right? And then the narrative or the mindset is, well, we got our premium. >> Yeah. And that's why I think the August date that Alexander's proposing makes actually more sense because you want to announce it sooner than later. And then you roll, then you go and go, here's an Optimist, here's a robo taxi, and that will make SpaceX stock go up. That's what Alexander's been saying this whole time. That would be a smart. >> Let me also say August 15th is my latest date. Now I have no feeling because there is no historic precedent on how quickly they could announce it. Could they announce it two weeks after the IPO? Could they announce, I mean, wouldn't it be wonderful if it was already announced before index? But let me just finish. But the thing is, what they want is a higher market cap. So my last date in my scenario, and maybe I'm dreaming, is the 15th of August. And my first day is probably just before the NASDAQ inclusion, which is three weeks after the 12th of June. So sometimes between end of June and the 15th of August. >> Okay. And the reason why this can happen now is because they made an amendment. And the S1 amendment actually now says because we were all looking for this in the prospectus and it wasn't there and we were saying to you Alexander, how could they announce an acquisition if they didn't prepare the before the IPO? That would be, you know, like you can't, you can't do that. But they, they kind of did, right? Because they now said, we're reserving this >> And and it in the amendment. So even a blind man could see it. You know, it's actually much more effective to put it in amendment where people say, so what are the changes? But oh, then if you put it buried into 300 >> buried in that's >> I think this is a very good discussion. It was very clarifying for me because I see now more what exactly could happen that actually makes sense. Number one, that's more an Alexander question. I don't think they can announce it two weeks or one week after IPO because that might be a fiduciary duty problem. Like if you, if you can prove they knew it before IPO and didn't tell in the IPO, I think that's an issue you need to have. >> Well, they did tell it in the amendment, but they sell out Tesla. >> Yeah. So, in any case, I think here's a scenario that could work. And I'm not talking as a retail investor. By the way, we are institutional now. So I'm kind of a both. I'm doing it personally and institutionally. So I think it's just an economics question. I think if you would do the following. If you make an offer, and that's more independent of, uh, SpaceX's market cap, even though it's good if it's high, and you say we do a one-to-one, but you at a minimum get where we are right now. So if you fall below, we have a ratchet. Then it's not a one-to-one. You're frozen there. Then then the market would say, that's a pretty good offer. We had 500, they pay, they are paying 750, let's say, whatever it is, right? Then everyone says, fine, that's a pretty good offer for right now for August, whatever it is. Then the stock goes up there and from there moves up with SpaceX, but not down. And then you have locked the Tesla investors in because then robo taxi scales, Optimist comes, but then no one knows anymore, well, would we actually be above 750? That's a little audacious to think that. And then it becomes more blurred. And everyone is happy, okay, I got my big fat paycheck. And so I can vote yes because now I'm actually scared to your point, Alexander, if I would vote no, who knows, maybe the stock drops because I don't know exactly if robo taxi would keep me up here. So if the premium is juicy enough to be reasonably juicy, then I think everything falls into place. Then you don't have risk anymore. Then the stock jumps up, the stock stays there, moves up lockstep with SpaceX, but not down. Uh, and to Herbert's point. Yeah. If you then have amazing launches, it drives up SpaceX because SpaceX effectively already owns this. And then, and the more everyone is certain that this is true, the more this is becomes true, right? Uncertainty about the vote is a big problem because then everything falls apart. So basically the juiciness of the premium is the problem or question. And let's say SpaceX goes to 2.5 trillion, something like that, then it's juicy. Then that's for sure juicy enough. So I think that is probably the scenario that I, at least I can see where I would say yes. Then early is better. Uh, it is reliable. It can get locked as wretched lockstep right up, but not down. And the certainty of the vote would be very high. And no one can really complain, only some crazy people, they can complain. But >> Complain. I know, I know my retail friends. There is always somebody to complain. I mean, I'm not so sure about the ratchet, but it would be wonderful to have a ratchet. I mean, will they >> Right. And the institutions won't complain that are not in space. So, okay, fine. You give me a 50% premium guaranteed. So fine. >> It will be 100% shares. Let's make that very clear because I see that in the comments. There is no cash. >> No, it will be 100% but >> Should SpaceX fall, they have to pay 1.2x or what, whatever it is, wherever they fall. That, that is true. But like I said, that's why you, you have to use these six months. You have to start as soon as possible to get in as much as possible before mid-December. You have to use the six months. Now, Joe, just give me the credit that I thought very early. The effort it took them to contact all these index makers and to convince them. I mean, and that is it. When you know how these people work, and I know I worked for Moody's, right? >> You did, yeah. >> When you know that, and when you see that they managed it for three and a half, and S&P, we will know in the next couple of hours as well. And then S&P is obviously the biggest one, the last one, and the biggest one. If they managed this, this is because it's a plan and a plan that has to be exercised in six months. >> And so here we are. >> But I totally agree. This is a masterpiece. But this is a good conversation, Herbert. And also, let's see if we are right. So we come to that conclusion right now. I have to think more about it. If we get to a one-to-one merger offer early, as as Alexandra says, with a ratchet where we say it has to be locked in here, then we get the Nobel Prize for speculation. >> Yeah. Wow. Okay. Both of you guys came up with some >> Yeah. Pretty wild theories, but you are defending it with your breadcrumbs and it's worthwhile for any potential investor at SpaceX and Tesla to think about these things. I'm, you know, don't know which way it's going to go, how true this is. >> I'm thinking here's just my reasoning why I'm thinking like this. I think Alexander makes all the right points. I'm just saying from an economics and game theory perspective, which is like key to manage these things, >> you need an offer on the table that is so good that everyone believes everyone is going to vote yes for that and take out risk. You cannot have massive risk in there. That's like destroying everything. >> So, you know what I did be to prepare? I I brought this because soon >> What is that? >> Gold. >> It's a scarf that I wear when I'm getting dressed up for fancy dressing. And it makes this horrible noise of coins. And I thought this is when when Joe came up with his two for one, I thought that's it. It's going to rain coins. So this is my Okay, that's I like it. This would be I I'm pretty sure Okay, let's just conclude it. I'm pretty sure it's not going to be a fixed market cap related merger offer, and that's it. That would fall apart in my opinion. But it will probably be something like that one to one with high SpaceX shares, maybe one to two, like who knows, one to 1.2 to whatever it is, uh, with some form of ratchet. So Tesla shareholders can basically be firm on their minimum they're getting and can then say, fine, now the stock, once the stock moves up because of that, I think everyone is locked in because then they don't know anymore where it could fall if they won't know and everything. So, >> I mean, if there is a ratchet, that would be wonderful. I would take it without a ratchet, too. But, um, and it would be Elon holding his promise. Loyalty deserves loyalty because this would be phenomenal. >> And by the way, Alexandra, if there is a ratchet, the odds that you are just right and it's not needed and it's just going to be one to one is very high. >> Yeah. >> So, it's more like a >> So, they could very well build one in. The saying give them a floor so that everybody's happy and get the vote through. That's true. >> Right? It's like a self-fulfilling derisking thing that doesn't really change anything if you're right about the index funds and you might be very well right. So, >> Agree. >> I think that might be the solution. >> There you glad I'm so glad we came around. >> Well, we had to engineer a little bit. That's the details matter because if you don't do that, it falls apart. We'll see what happens. And also, Alex, no, no, I want to be very clear. The ratchet means that there are scenarios where I, my prediction of one to two could absolutely become true. It's just less likely to be the case. >> There is not enough authorized shares, but it's okay. >> Okay. >> I think the big one would be, I think you were the only one, Alexander, who was proposing and suggesting that the announcement could happen sooner than people realize. Uh, most people are thinking it was going to be the end of this year or next year. You're saying next month. We'll see if that's true. That's the thing to watch out for. >> Please all keep in mind calculations of the stock price have to be based on 4 billion outstanding shares. I know you all go, "Oh, there she goes again." It's super important. If, if there is a market cap offer on the table, that four billion number is super important. Okay? Just keep that in mind. >> Thank you both. Thank you everybody. See you soon. All right. Thank you.