Musk Calls Tesla-China Report “Absurdly Fake News” as SpaceX Preps First Earnings Since Going Public
Elon Musk has flatly denied a Wall Street Journal report claiming Tesla executives were preparing to separate the company’s China business ahead of a possible merger with SpaceX, calling the report “absurdly fake news” — a denial that comes just days before SpaceX reports its first earnings as a public company on Tuesday, August 4.
What the Report Claimed
The Wall Street Journal reported, citing a person familiar with the matter, that some Tesla executives had been instructed to prepare for a separation of the company’s China operations ahead of a potential merger with SpaceX, according to Yahoo Finance. A second source told the newspaper that advisers had discussed options including a spin-off, sale, or closure of the China business entirely. Other reporting on the story, cited by CBT News, indicated executives had considered establishing a distinct sales entity for Shanghai exports and restricting China-based employees from accessing other company systems.
The underlying logic behind the report centers on regulatory separation: SpaceX is a major U.S. defense contractor, and a merger with Tesla would likely require shielding SpaceX’s defense work from Chinese regulatory oversight tied to Tesla’s Shanghai operations. China accounted for about 18% of Tesla’s global sales in the first half of 2026, according to CBT News, and Tesla’s Shanghai plant — unlike many competitors’ China operations — isn’t structured as a joint venture, meaning it carries different regulatory exposure than typical foreign automaker operations in the country.
Musk’s Response
Musk responded directly on his social media platform X, calling the report “fake news” in reply to a post referencing the Wall Street Journal story, according to Yahoo Finance. He went further in additional comments cited by Yahoo Finance and Barchart, writing that a Tesla-SpaceX combination has “never even come up in a discussion ever” and describing the report as “absurdly fake news.”
Tesla’s China operations separately denied the report as “false information,” according to CoinGape’s coverage of the story.
Why the Denial Didn’t Fully Kill the Speculation
Despite Musk’s denial, broader merger speculation between the two companies hasn’t gone away — in part because of comments Musk himself made just days earlier. During Tesla’s July 22 quarterly earnings call, an analyst directly asked Musk about a possible Tesla-SpaceX combination. Rather than ruling it out, Musk acknowledged growing overlap between the companies, according to IBTimes, specifically pointing to collaborations like Terafab, a jointly discussed semiconductor manufacturing project he described as “really going to be a gigantic project.” Musk added that a quarterly earnings call wasn’t the appropriate venue to discuss combining companies, saying “it is got to be done with the appropriate process,” before handing the discussion to Tesla’s chief legal officer, Brandon Ehrhart, who highlighted the companies’ joint projects.
That combination of specific denial paired with general acknowledgment of “more and more overlap” has kept prediction markets active on the question. According to CoinGape, betting platform Kalshi has assigned roughly 49% odds to a Tesla-SpaceX combination occurring before May 2027, reflecting how seriously some market participants are taking the possibility despite Musk’s pushback on this specific report.
Market Reaction
Tesla shares jumped 2% in overnight trading following Musk’s denial, after the stock had already surged 10% earlier Thursday, according to Yahoo Finance. Even with that rally, Tesla shares remained down 37% for the month, putting the company on track for its worst monthly performance since December 2022.
SpaceX stock, which began trading publicly after a June 12 Nasdaq debut, rose about 1% in overnight trading following the news but remained on pace for its fourth straight weekly loss, having finished in the red in five of its seven trading weeks since going public, according to Yahoo Finance. The stock has fallen to its lowest closing price since the IPO, down more than 50% from its all-time high set in June.
The Stakes for SpaceX’s Earnings Report
SpaceX’s IPO in June raised approximately $75 billion at a $1.75 trillion valuation, according to Bitcoin.com’s News desk, with reported investor demand for shares reaching as high as $250 billion against that $75 billion offering. Musk has projected SpaceX could generate roughly $1 trillion in annual revenue by 2030, a figure well above Morgan Stanley’s own estimate of $330 billion for the company by that point.
The company’s financials to date paint a more complicated picture than that long-term projection suggests. According to Yahoo Finance, SpaceX lost nearly $5 billion on $18.7 billion in revenue in 2025, and lost another roughly $4.28 billion in the first quarter of 2026 alone. Tuesday’s earnings report — SpaceX’s first as a public company — will put Starlink subscriber growth, AI-related revenue, and the company’s heavy ongoing spending under direct investor scrutiny for the first time, right as the timing intersects with an added complication: nearly 1 billion SpaceX shares are set to become eligible for sale roughly two days after the earnings report, according to IBTimes, a lockup expiration that could add further pressure on the stock regardless of how the earnings numbers themselves land.
FAQ
Did Tesla confirm plans to sell or separate its China business? No. Both Elon Musk and Tesla’s China operations denied the Wall Street Journal’s report, with Musk calling it “absurdly fake news” and stating a Tesla-SpaceX merger has never been discussed.
Why would Tesla’s China business matter for a potential SpaceX merger? SpaceX is a major U.S. defense contractor, and a merger with Tesla would likely require insulating SpaceX’s defense-related work from Chinese regulatory oversight tied to Tesla’s Shanghai manufacturing operations, which account for a significant share of Tesla’s global sales.
When is SpaceX reporting its first earnings as a public company? Tuesday, August 4, 2026 — its first earnings report since going public via a June 12 Nasdaq debut.
How has SpaceX stock performed since its IPO? Poorly by most measures — the stock has fallen more than 50% from its all-time high set shortly after the IPO and has finished in the red in five of its first seven trading weeks.
What are prediction markets saying about a Tesla-SpaceX merger? Kalshi, a prediction market platform, has assigned roughly 49% odds to a combination of the two companies happening before May 2027, despite Musk’s denial of this specific report.
Conclusion
Musk’s forceful denial hasn’t put the broader merger speculation to rest, largely because his own comments on Tesla’s July earnings call left the door open even as he shut down this specific China-separation report. With SpaceX’s first public earnings report landing Tuesday and a major share lockup expiration following just two days later, the coming week is shaping up as a genuine stress test for investor confidence in both companies — regardless of whether a formal merger ever materializes.
Sources: Yahoo Finance, CBT News, CoinGape, IBTimes, Barchart (reporting dated July 31-August 3, 2026).