$TSLA · Meet Kevin · 2026-10-29

Tesla and SpaceX. We shouldn't be talking about the flying car, but about money. This is one thing we knew from the beginning at SpaceX and Tesla. Elon needs to raise a lot of money. A lot, a lot of money.

Because my estimate that an additional $420 billion needs to be raised to reach 10 gigawatts by the end of 2027 indicates that we've only come a tenth of the way in raising the funding, right?

I mean, if you have 10 tranches worth $40 billion, we've just completed a $ 40 billion lease, and another $40 billion in debt. As you know, we still have to do it eight more times to reach the 10 GW target.

Well, it turns out that this might be a slightly underestimate . Elon Musk is literally saying the following right now. I would say that reaching 20 gigawatts next year is highly unlikely.

But the percentage is not zero. Whereas just a few months ago the probability was zero. The likelihood of reaching 20 gigawatts increases over time.

In other words, the richest man in the world is telling you that if you are pessimistic about AI devices, you don't realize how much money he will spend on AI. If his net worth is around $1 trillion, here's a warning: he's about to spend $1 trillion on hardware.

My estimates indicate that it will take another $420 billion to reach 10 gigawatts. The next 10, which will most likely be next-generation chips, will probably cost even more .

The next 10 will likely cost $600 billion. This brings us to about one trillion and twenty. I do n't even know how to pronounce that number. So, a little over a trillion dollars of spending that SpaceX needs to raise money for in order to be able to spend,

But this TerraFab expansion is really exciting, and I think the only way they can actually raise that extra trillion dollars is eventually by merging Tesla and SpaceX.

So, we have now done something that seems a bit crazy , but we have devised a kind of formula to combine the price-to-earnings-to-growth (PEG) ratio between the overvalued Tesla and the undervalued SpaceX, because in my opinion I think they are both likely to be acquired.

In fact, I just bought shares in Tesla. We announced this in the "Alpha" group for course members a few days ago. I think that was last weekend. You can join us there via reinvest1.com.

I think we bought at a price close to 360. We added some Tesla shares. Its price is now around 406. That's great, but you'll find out why.

First and foremost, we know that the chances of a Tesla-SpaceX merger are increasing. Currently, Kalchi's odds indicate that this will happen before 2027 with a 64% probability, and before 2028 with a 74% probability.

I think it's almost certain that this will happen before the 2028 election season. So, I wish they had an option for the period from September to November 2028, because I think the probability would be close to 100%.

Now, it's clear that things could go wrong. We may encounter some obstacles, but I believe that under the Trump administration , nothing will stand in our way.

So, the first thing you need to know is that Tesla , and this is going to seem a little complicated. So, I'll keep it simple for you. Tesla is trading at a market capitalization of $1.61 billion.

If you combine these market values, Tesla has a market weight of approximately 45% of the two. Now, to be fair, there will probably be a small premium for Tesla on acquisition, but more on that in a moment.

This means that for today, I can actually balance Tesla's PEG ratio, which takes a futures earnings multiple , which is crazy, of 234, by dividing it by a 4-year average growth, which I actually think is low for Tesla.

I think this will probably be closer to 60% , but I'll go with the Wall Street numbers and get a PEG ratio of 4.9, which is generally not within my buying limits.

However, if you divide 234 by 60, it is actually closer to a PEG ratio of approximately 3.9. That will make a difference here in a moment. However, if you weight that according to its market value, and then incorporate SpaceX’s PEG ratio , which is only 0.38 at the moment, I get a market PEG ratio of 2.6 for the combined company. This is rather interesting.

Now, I personally believe the company's PEG ratio is probably closer to two, because I believe the growth rates at both ends are higher. Good? So, I'm not as optimistic as some of the big optimists, but I am more optimistic than some of these basic scenarios about SpaceX .

I think 132 holds a bottom for SpaceX. The profitability of these chips continues to rise day by day. We just talked earlier about how credit default swaps have actually declined because of the kind of meme momentum we've seen them generate.

Therefore, I am very optimistic that Elon is making a good investment for the foreseeable future.

At some point in the future, these chips will lose a lot of their value, but I think we can pay for them and grow beyond that before that happens. It will have greater residual value in the long run after it has already paid for itself . So, I am optimistic about that.

But the problem is money. If they wanted to pay off all their debts, they only had $30 billion in cash. If they only pay their short-term bills , they will have about $70 billion in cash.

Well, the problem with that is that we need to raise another $340 billion after this $40-for-$40 deal. If we are aiming to achieve the next 10 gigawatts , we will have to raise another $600 billion.

It's likely that Elon will merge these companies and pay a premium on Tesla shares. By the way, we made a video about how to handle a Tesla-SpaceX merger , didn't we? You can watch that. Just search for it on YouTube. Or on YouTube.

Merging the companies will give him more leverage to build his giant factory and his dreams of owning this huge and amazing data center. I am excited about it , but I realize there will be many periods of suffering.

The market does not do well when it comes to struggling during fundraising times. People become anxious about what is happening. I think that's why we stumbled a bit . It's clear we had a tough day with Google.

I think that's why we stumbled a bit . This often happens when the suffering is at its worst.

However, SpaceX will experience a much greater amount of suffering. I am not saying that things will be entirely upward for this merged company because of that. But I am optimistic about what they are building and what they are creating.

I believe that when you combine their valuations, they trade at a discount of perhaps 20% when combined. This is a discount that could increase further if growth accelerates even more.

So, this is what I'm thinking about right now. In the long run, I think taking advantage of the volatility resulting from the merger is a good move.

Lauren and I were buying a new Tesla. We were unable to obtain permanent access to FSD. I said to myself, "Man, I wish I could." I think people will feel the same way about what we sell at reinvestone.com, the "Reinvest Terminal" platform.