Investor Gary Black of The Future Fund LLC has warned against a possible SpaceX–Tesla Inc. (NASDAQ:TSLA) merger, citing the failed Netflix Inc. (NASDAQ:NFLX) acquisition of Warner Bros. Discovery Inc. (NASDAQ:WBD).
Shareholders Hate Firms Issuing Equity For Acquisitions
On Tuesday, the investor took to the social media platform X to reiterate his stance against a Tesla-SpaceX merger. Even if SpaceX were to go public and leverage that equity to explore a merger with/acquisition of Tesla, it would be detrimental to the investors of the commercial space flight company.
The investor said that buyers of SpaceX stock wouldn’t “willingly invest capital in a firm” that would issue equity to buy another company, sharing that believers of the merger were “fooling themselves.” He then said that investors weren’t keen on equity-backed mergers.
“Shareholders HATE when companies use equity to buy other companies,” he said, citing the example of the failed Netflix-WB Discovery deal. “The latest example is $NFLX which tried to buy $WBD and NFLX stock dropped -30%,” he said, adding that the stock only recovered when Netflix management backed away from the deal.
It’s worth noting that Paramount Skydance (NASDAQ:PSKY) is currently in pole position to complete an acquisition of Warner Bros., but lawmakers are demanding a probe into the alleged foreign funding involved in the proposed takeover.
Dilution Concerns
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