EXCLUSIVE: SpaceX–Tesla Merger Can Put XOVR ETF's 20% SPCX Bet at Risk, 'Could Sacrifice Long-Term Value' Says CIO

What happened

ERShares founder and chief investment officer Joel Shulman said the ERShares Private-Public Crossover ETF holds about 18% to 20% of its assets in SpaceX, so any merger involving SpaceX would matter greatly for the fund.

Confirmed

Global impact / market context

If SpaceX buys Tesla at a high price, SpaceX shareholders could give up some future gains to Tesla holders, and paying in stock could dilute them, which means issuing more shares and shrinking each existing share's slice of the company.

Analyst inference

Tesla already trades at historically high valuation multiples, which means its share price is high relative to its profits, so Tesla shareholders would likely demand an extra acquisition premium on top of that price, raising the cost to SpaceX.

Analyst inference

What to watch

1. Shulman named free cash flow per share, which is cash left after spending needed to run and grow the business divided by share count, and long-term earnings growth as key measures. Confirmed
2. Watch the transaction structure, since preserving Elon Musk's control while protecting shareholder value would be central, per Shulman, including how much is paid in stock versus cash. Proposed
3. Watch the valuation assigned to both businesses and what SpaceX shareholders receive, because a large premium or stock-for-stock deal could reduce XOVR's potential long-term gains. Analyst inference

Affected assets

• OP — Optimism

Evidence

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