Cathie Wood Says Tesla and SpaceX Could Drive US GDP Growth to 7-9%

Deep News
10/27

Cathie Wood, founder of ARK Invest, has stated that Tesla and SpaceX are steering the US economy toward real GDP growth as high as 9%, while ARK believes a merger between the two companies could deliver substantial gains for shareholders of both.

On Monday, Tesla Motors (TSLA) shares climbed 5%, marking their best single-day performance in nearly two months, while SpaceX (SPCX) stock dipped slightly by 0.4%.

"Tesla and SpaceX are leading us into a world where real GDP growth runs at 7% to 9%. And we are struggling to comprehend that," Wood said in a video posted on X.

Wood noted that this outlook is hard to grasp because investors have long been accustomed to a slower growth environment. "What I think confuses many people is that we have been in a 3% GDP growth world for so long," she said. She added that after 125 years of 3% GDP growth, Musk is now pushing for faster expansion.

In a recent briefing shared on X, ARK pointed out that the growing business overlap between Tesla and SpaceX provides a stronger financial rationale for a merger. "Given the increasingly intertwined commercial interests, a shared chief executive, and strong strategic and cultural alignment, ARK believes that combining these companies would deliver significant benefits to both shareholder bases," ARK stated.

Using its October 20 forecast data and October 23 closing prices, ARK constructed a model for a stock-for-stock merger with no premium paid by either side. According to its projections, returns for Tesla investors could increase 3.8 times, while incremental returns for SpaceX investors could rise 7.2 times. If both investor groups shared the resulting additional gains, SpaceX would effectively be paying a premium of about 24% over Tesla's October 23 closing price.

Under this scenario, by 2031, Tesla shareholders would hold approximately 42% of the combined company's projected market value, while SpaceX would contribute 62% of the merged entity's revenue and 69% of its EBIT. In this scenario, Tesla shareholders would hold roughly 42% of the combined company's projected 2031 market value, with SpaceX contributing 62% of revenue and 69% of EBIT.

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