xAI has become toxic to SpaceX’s IPO: The Paris Public Prosecutor’s Office raised their CSAM probe into xAI to a criminal investigation on May 7th, which has set off many alarm bells across Europe, especially among reinsurers of SpaceX’s Directors and Officers (D&O) insurance, as well as Errors and Omissions (E&O) insurance. Two of the world’s most powerful reinsurers are already re-evaluating the risks, based on a whistleblower’s alert (more details below), which means they’ve sent Advisory Notices to the IPO underwriters. SpaceX is more easy to merge with Tesla as a private company: There’s rife speculation about a Tesla-SpaceX merger, but this only makes sense if SpaceX remains private, as a merger after it goes public would be extremely complicated, costly, and time-consuming. If SpaceX is private, however, Tesla could easily do a “merger of equals” without too many hitches, as Musk has super majority voting power at SpaceX, and roughly the same at Tesla, given its supine Board of Directors. It would be almost as easy as SpaceX’s $250 billion acquisition of xAI on February 2nd, which is now the cause of the IPO becoming wobbly. A Tesla-SpaceX merger of equals is more lucrative than a SpaceX IPO: As detailed in my March 28th report on the SpaceX IPO (here), a $50 to $75 billion IPO of SpaceX would not only be the largest ever, but also suck a lot of capital out of the markets, especially from Tesla. Retail investors make up 40% of Tesla’s shareholder base, and many would likely swap their Tesla shares for SpaceX, which would weigh on Tesla’s stock price. If Tesla and SpaceX do a merger of equals, it’s not only a “win win” for both companies’ shareholders, but it would also give Musk around 32% voting rights of the merged entity—effectively veto power. Tesla would moon in the event of a merger with SpaceX: Assuming a merger of equals at a market cap of $1.5 trillion for both companies, the passive buying of Tesla would likely create history’s biggest buying squeeze (more details below). It would also likely create one of the biggest shorting opportunities after the passive buying is finished, as both Tesla and SpaceX are burning cash and are excessively over-valued. Figure 1 below shows how quickly SpaceX’s valuation increased ever since Trump was elected President in November 2024. What’s even more mind-boggling is this: SpaceX’s valuation rose from $800 billion in December to $1.75 trillion in March, despite 2025 revenue growth of only 33%.February’s jump to a $1.25 trillion valuation from $800 billion in December was based on a SpaceX valuation of $1 trillion and xAI’s valuation of $250 billion. The final jump to a $1.75 trillion valuation came with the Confidential IPO Filing target with the SEC. Figure 1: SpaceX Valuation Changes by Funding RoundsSource: PitchBook and Forge Global.