Musk backs SpaceX-Tesla merger as rocket firm turns profit

Elon Musk said on Tuesday that he would back a merger of SpaceX and Tesla, as his rocket and AI company reported its first quarterly profit since going public, driven by deals to rent out computing power to AI firms.

Asked about a possible tie-up on a call with analysts, Musk said he felt he was "tap dancing through a minefield," but that a combination would be "a good idea." Shares in SpaceX shot up nearly 5% in after-hours trading following the comments.

Musk said special committees of independent directors at both SpaceX and Tesla have been set up to study the idea at the request of shareholders.

He added that he could not take part in their talks because he has a conflict of interest.

Musk is chief executive of both companies and also serves as chairman and chief technology officer of SpaceX.

He owned 48.4% of SpaceX as of June 30, according to a regulatory filing, and controls more than 82% of its voting power through super-voting shares.

He holds about 20% of Tesla.

The committees have not agreed on the terms of any deal and there is no guarantee they will, Musk said, cautioning that it would be overstating it to treat a merger as a certainty.

Any deal would need the backing of a majority of all Tesla shares, not just those cast in a vote, which Musk called "quite a high hurdle." He said the two companies could gain from working together on AI software, chip design, robotics and space-based computing.

His remarks came after SpaceX posted net income of $4.4 billion for the July-September period, compared with a loss of $1.1 billion a year earlier.

Revenue jumped 161% to $14.6 billion.

The quarterly results follow a bumpy start on Wall Street.

SpaceX began trading on the Nasdaq on June 12 after an IPO priced at $135 a share that raised about $85.7 billion.

Its first earnings report as a listed company showed second-quarter revenue of $7.8 billion and a net loss of $541 million.