Last week, the Nasdaq 100 fell 0.8%, marking its second consecutive weekly decline. SpaceX rose 7.8% on Wednesday before dropping 9.1% on Thursday; Tesla's earnings beat expectations, yet the stock still fell 3.1%. The daily ups and downs of these two companies this week were dictated by neither.

Figure 1: Over the past five days, both stocks were pulled along by the same news (Closing price on Oct 16 = 100)

What drove their movements was a single answer during SpaceX's earnings call on October 20. When asked about the merger, Musk stated that both companies' boards had formed special committees; as a conflicted party, he could not participate in discussions, but "I think it's a good idea." He followed up by clarifying that treating the merger as a done deal was overstated, given that Tesla requires a majority vote of all outstanding shares—a "quite high threshold."

Wall Street didn't hear the second half. Reuters' headline read: It's a matter of time, not if; the only remaining dispute is how much premium Tesla shareholders should receive, ranging from zero to 35%.

This question is wrong. The merger involves a share swap; the premium isn't cash, it's SpaceX stock. Tesla shareholders aren't being acquired; they're being swapped for a different currency. The real question is what that new ticket is worth.

What kind of ticket are you getting?

First, look at the price. SpaceX listed on June 12 this year, closing at $201.8 on its third day, then dropped to $108.4 by July 31, before recovering to $147.5 last Friday. In four months, it fell 46% then rallied 36%. Once the exchange ratio is locked in at signing, Tesla shareholders will bear the full risk of the journey between signing and settlement.If a 30% premium is secured at signing, a mere 23% drop in SpaceX would wipe out that premium entirely.

Figure 2: SpaceX's listing price trajectory and two unlock dates

Next, consider volume. At listing, only 4.3% of SpaceX shares were in circulation. On October 22, approx. 1.3 billion shares unlocked, valuing the company near $190bn at the day's close, with SPCX falling 9.1%. On December 8, the 180-day primary lock-up expires, releasing all remaining restricted shares. Paying the premium with a ticket undergoing massive supply expansion is line one of the consideration terms.

Then, assess quality. Q3 was SpaceX's first profitable quarter since listing, reporting $14.6bn in revenue and $4.4bn in net profit. Breaking that down, ~$1.6bn of the $4.4bn came from non-operating items: interest income, $1.03bn in other income ($560mn from related parties), plus a tax benefit. Cumulative losses over the first three quarters remain at $410mn. Capex hit $19.6bn in Q3—$5bn more than revenue—with YTD free cash flow estimated at -$35bn per media reports. As noted previously, SpaceX's long-term debt rating is BBB, carrying an 8% to 8.5% coupon.

Finally, check the cash. Tesla held $45.4bn in cash and short-term investments at the end of Q3, generated positive FCF of $1.5bn in the quarter, and cut its annual capex guidance from $25bn to $20bn. That $45.4bn is enough for SpaceX to burn through at Q3's pace for over two quarters. Ross Gerber, who holds both stocks, put it bluntly: Any premium dilutes SpaceX shareholders because their bill is rising.

Figure 3: Consideration statement—what Tesla gives vs. what it gets back

Swapping a company with net cash for equity in a company spending more each quarter than it earns. That's the entire consideration package.

The 30% premium buys the final veto power

Based on last Friday's market caps, without a premium, Tesla shareholders would get just over 40% of the combined entity; with a 30% premium, nearly half. Musk holds ~20% of Tesla and ~48% of SpaceX, wielding >80% voting rights via super-voting shares. Barclays, REX, and Dialectic each estimate Musk's post-merger equity at ~37%, with voting power between 56% and 58%. At SpaceX's listing, public shareholder voting power totaled just 0.8%.

Placing these figures side-by-side makes clear what the premium buys. Today, public shareholders hold 80% of Tesla, meaning Musk must court votes for compensation plans, the Texas move, and every major decision. Post-merger, dual-class structure gives Musk majority voting control, eliminating future vote contests.The premium truly buys not Tesla's cars or robots, but the shareholders' final veto power.

The cost is determined by voting arithmetic. The rule is a majority of outstanding shares; abstentions count as against, and brokers cannot vote proxies. Compare this to the June 2024 compensation vote—the most intense mobilization in Tesla's history, featuring company lotteries and CEO appeals. Result: 2.31bn shares voted (72% of outstanding); 335mn unvotable by brokers; independent shareholders voted 1.35bn for, 529mn against. Including Musk's brothers' ~400mn shares, approval represented ~55% of total outstanding. The threshold was 50%. After that vote, Tesla remained Tesla. After this one, it won't.

One detail warrants attention. On October 19, Tesla launched a "Voluntary Retail Voting Program" in its proxy materials: retail investors can pre-authorize voting per board recommendations at future meetings, with options to exclude or include M&A. On October 20, Musk announced the "special committee." Laying the voting path first, then announcing the bridge to cross.

Dialectic's Ryan Zurrer pinpointed it: "The biggest obstacle is the conflict between Tesla shareholders' votes and Musk's own incentives."

Cartoon: Premiums are paper, discounts are real

The calendar is in S&P's hands

The Nasdaq 100 isn't the issue; both are constituents, so no new passive inflows are created. The issue is the S&P 500: Tesla is in, SpaceX is out. Before June's listing, S&P explicitly refused to change rules for it: 12-month listing history, GAAP profitability in the most recent quarter and cumulative over the last four, and >=10% float. By these rules, SpaceX wouldn't qualify until June 2027 at the earliest. The cumulative profitability requirement also hasn't been met: Q1 loss of $4.3bn, Q2 loss of $540mn, Q3 profit of $4.4bn—requiring another $440mn profit in Q4 to turn positive.

JP Morgan suggested last week that for a share-swap merger, the index committee might grant an exception, allowing SpaceX to replace Tesla, generating passive inflows equal to ~10% of post-merger float. The inverse holds too: If settlement occurs before qualification and no exception is granted, Tesla's removal from the S&P 500 would force passive selling. Same mechanism, opposite direction.

Tesla experienced this mechanism firsthand. On Nov 16, 2020, S&P announced Tesla's inclusion, sending the stock up 12% as funds bought $51bn worth. Two years later, those positions cost funds ~$24bn. Passive flows that lifted prices then may be the same capital dragging them down now.

Thus, the merger's biggest variable isn't the premium—it's the timeline. Markets are pricing based on S&P's calendar. Predictive markets price a "formal merger announcement" at 19% by end-2026, 30% by late Jan 2027, 35% by late Feb, 59% by late Jun, and 66% by end-2027. The steepest jump crosses the June 2027 threshold. Another platform requiring a "definitive agreement" sets stricter odds: 65% before 2028.

Figure 4: Prediction market ladder and three key dates

There's also the antitrust angle: Former DOJ officials have raised concerns that post-merger Starlink access conditions for other automakers could constitute vertical foreclosure. Brushed aside briefly, but it remains another timeline variable.

Tesla's K-line changed hands starting last week

Synthesizing the above, Tesla's stock price from last week is a ternary equation: Merger probability × Swap value + (1 - Probability) × Independent Tesla value. None of the three variables are in Tesla's control.

Last week's tape was the first evidence. Tuesday night, Musk said "good idea," and Tesla rose 3.4% Wednesday. Wednesday night, Tesla's own earnings beat EPS estimates and turned FCF positive, with no new merger news on the call; Thursday saw a 3.1% drop. The market used two days to signal which message mattered more.

Sell-side analysts split. Needham's Chris Pierce argues that at current valuations, there's limited upside from the merger, and rumors obscure Tesla's organic upside; RBC baked the 20-30% premium directly into its target price. For the same stock, one sees premium as upside, the other as a ceiling.

The standalone Tesla picture was clarified by last week's results: Revenue $28bn, flat YoY; GAAP net profit $790mn, down 43% YoY; deliveries 487k units, down 2% YoY; stock down 14% YTD. Without the merger, these numbers walk their own path.

For those holding Tesla and selling calls, this week demands clarity: Merger rumors inflated premiums, but the gap on official announcement day is exactly what Sell Calls miss. Who gets the premium? Not the call sellers. Risk warnings don't imply bearishness on Tesla; rumor-driven dips can be entry opportunities, but know the currency has changed. Specific position management is on the member page.

[Next Week Outlook]

This week features earnings colliding with rate decisions. Last week, the Nasdaq 100 fell two weeks straight, narrowing from 5.5% to 0.8%; the AI chain's knife has dulled, but hasn't been sheathed.

This week's table: Rate decision on Wednesday—the first meeting after September's hike. Markets price a hold, watching for inflation wording changes in the statement. Post-market Wednesday: Microsoft, Google, ServiceNow report. Post-market Thursday: Amazon. Focus is on whether capex guidance accelerates further and where funding comes from. Within MAAI constituents, Vertiv reports pre-market Wednesday, ServiceNow post-market Wednesday.

In short: Three cloud giants report AI revenue; one rate decision sets the price of money.

Positioning: Merger rumors have lifted implied volatility for both Tesla and SpaceX; do not chase pre-event. At the index level, post-two-week-drawdown earnings week, position sizing matters more than direction. See website for specifics.

Premiums are paper; discounts are real. Before signing, ask: Who is printing this ticket, and when can it be sold?

[For next week's outlook and specific holdings, visit:www.finplusplus.com]

(Views expressed are personal and do not constitute investment advice.)