Southern 2x Tesla (07766) dropped more than 3%, trading at HK$67.76 as of press time, down 3.39%, with a turnover of HK$1.3694 million.

On the news front, discussions regarding a potential merger between Elon Musk's two flagship companies, SpaceX (SPCX.US) and Tesla Motors (TSLA.US), have recently heated up again. Industry analysts suggest that such a move could resolve conflicts of interest arising from Musk simultaneously managing both firms and streamline existing business dealings between them. However, the high capital expenditure expansion plans of both companies over the next several years also pose significant risks.

It is important to note that both companies are currently in a high capital consumption phase. According to Tesla Motors' second-quarter earnings data, the company's free cash flow turned negative in that period, with full-year capital expenditures expected to be no less than $25 billion. On the other hand, SpaceX holds nearly $7 billion in net debt, while Tesla Motors' debt stands at $27 billion. Both entities have substantial funding needs in areas such as chip manufacturing, AI data centers, and the commercialization of the Starship rocket, making a merger unlikely to improve cash conditions in the short term.