I Wouldn't Buy Tesla Stock Betting on a SpaceX Deal. Here's Why.

Tesla (TSLA) and SpaceX (SPCX) boards have each formed special committees to evaluate a potential merger, putting a combination in play at valuations of $1.5 trillion for TSLA versus $2 trillion for SPCX.

The Motley Fool analyst argues a deal at current prices would shortchange TSLA holders. Based on those valuations, TSLA shareholders would own just 43% of the combined company.

The growth gap is stark. SPCX posted 161% revenue growth, while TSLA's revenue was flat. But SPCX's spending is heavy: capital expenditures of $48.1 billion versus $13 billion at TSLA, producing negative free cash flow of $35 billion at SPCX. A merger would hand TSLA shareholders a stake in that cash burn.

The analyst also contends the valuation math does not improve for TSLA investors, since the combined company would trade at higher multiples than TSLA does alone. Interpretation: the bull case for a deal rests on SPCX's growth, but the supplied figures suggest TSLA holders would pay a premium multiple for it while owning less than half the combined entity.