Millions of Americans have indirect exposure to Elon Musk’s business empire through index funds in their 401(k) accounts, even if they have never purchased shares of his companies directly.
A potential merger could change that exposure before the end of the year.
Senior Equity Research Analyst at Barclays, Dan Levy, told clients that Tesla and SpaceX could merge before December 2026, potentially creating one of the largest publicly traded companies by valuation, The Wealth Advisor reported.
The prospect raises questions about how such a deal could affect passive index funds and the retirement savings tied to them.
Tesla is already part of the S&P 500, according to the S&P Dow Jones Indices’ SPY/SPX fact sheet, meaning its stock influences many broad-market and target-date funds held in workplace retirement plans.
If a merger takes SpaceX public, index providers could adjust their holdings, potentially changing millions of Americans’ portfolio exposure without requiring them to take any action.
Also read: SpaceX is now in your 401(k), and Musk is the risk
Barclays maps a Tesla-SpaceX share-swap ratio before the December vote
Barclays laid out the share-swap arithmetic for a potential Tesla-SpaceX merger, The Wealth Advisor reported. Based on the analysis, Tesla shareholders could receive about 0.7 SpaceX shares for each Tesla share in an all-stock deal before any acquisition premium.
Barclays indicated the two companies combined would have a market value of roughly $3.6 trillion, with Tesla’s December 6, 2026, meeting as the possible approval window.
Each Tesla share would convert into a stake in the combined entity’s aerospace, artificial intelligence, and automotive revenue streams, which Barclays framed as a vertical-integration thesis.
Barclay’s ownership breakdown helps explain why SpaceX would likely be the acquiring entity in any proposed deal. Musk owns roughly 20% of Tesla and about 48% of SpaceX, but supervoting shares give him approximately 82% of SpaceX’s voting power.
Why passive index funds already own more Tesla than most savers realize
Tesla joined the S&P 500 in late 2020 and now accounts for about 2% of the benchmark powering millions of American 401(k) accounts, Quartz reported.
That weighting means the stock’s daily moves ripple directly through target-date funds, total-market funds, and large-cap index funds that dominate workplace retirement menus.
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A Tesla-SpaceX merger would collapse two of the most-watched Musk-linked tickers into a single corporate structure, forcing mechanical adjustments across index funds.
S&P Dow Jones Indices would then determine how the new combined entity sits inside the benchmark, potentially expanding the Musk-related footprint across passive portfolios.
Pension managers across California and New York already flagged this concern before SpaceX even began trading on public markets this year.
The managers wrote to Musk, expressing concern that SpaceX could become an unavoidable holding in their public portfolios going forward, Quartz reported.
Portfolio concentration risk now sits inside most retirement accounts
The merger math has direct implications for the broad-based benchmarks that currently dominate workplace retirement menus and brokerage portfolios across the country.
Advisors have begun flagging the combination as a dilution event with knock-on effects for anyone holding a market-weight index fund inside a retirement account.
Clint Sorenson, Co-Founder of Ascentis Asset Management, told InvestmentNews an all-equity merger would deepen dilution for portfolios heavy on tech names.
<strong>If it’s an all-equity deal, the whole game becomes dilution and position size. Most advisor portfolios are already overweight a handful of mega-cap tech names through their benchmarks, and a merger like this only compounds that,</strong>
Sorenson flagged a key-man risk inherent in portfolios holding Musk-linked positions, framing single-executive exposure as a concentration issue beyond standard sector weighting.
Barclays reinforced the structural concern by noting Musk would hold roughly 37% of the combined entity’s equity and 56% of its voting power.
Tesla and SpaceX each filed Form 8-K disclosures with the SEC on October 21, 2026, confirming their boards had formed special committees to evaluate a potential combination.
On SpaceX’s Q3 2026 earnings call, Musk told Tesla investors a merger would be “a good idea,” The Motley Fool reported
Jacob Tally, an advisor at Seattle-based Prospero Wealth, said Musk’s pattern of business consolidations leaves retirement investors more exposed to one executive’s decisions. The February 2026 xAI absorption by SpaceX pulled another large private valuation into the Musk footprint already tracked by index funds, as InvestmentNews noted.
What to check inside your 401(k) before any Musk deal closes
Each fund’s fact sheet, available through the plan portal, lists its ten largest holdings and the share of assets in each position, with the underlying data drawn from Securities and Exchange Commission (SEC) filings on Form N-PORT that become public 60 days after each fiscal quarter ends.
Holding an S&P 500 fund alongside a Nasdaq-100, large-cap growth, or technology fund can mean investing in the same major companies multiple times, a layering effect Sorenson flagged as an underappreciated source of concentration risk in an InvestmentNews analysis.
Some 401(k) plans also offer a self-directed brokerage account, allowing participants to buy individual stocks beyond the plan’s standard fund options.
The plan’s summary plan description explains whether this feature is available, and the Employee Retirement Income Security Act (ERISA) requires plans to provide this document to participants.
A potential Tesla-SpaceX merger could change how some retirement portfolios gain exposure to Musk’s businesses, but the extent of that change will depend on the final transaction terms and how index providers respond.
Until S&P Dow Jones Indices and fund managers establish the combined entity’s benchmark treatment, reviewing existing holdings through each fund’s fact sheet remains a practical first step.
Related: Bank of America backs SpaceX stock that may be in your 401(k)
