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Tesla (TSLA) is one stock that remains in the spotlight every week. After missing on second-quarter earnings, Tesla is now reportedly considering selling or spinning off its China business to clear a potential path toward a merger with SpaceX (SPCX), according to a report from The Wall Street Journal. CEO Elon Musk has dismissed the report as “absurdly fake news.” Still, the speculation raises an important question for Tesla investors: What would happen to TSLA stock if the company actually separated its China operations?
The idea is tied to national security concerns surrounding SpaceX’s U.S. government and defense contracts. Separating Tesla’s China business could theoretically make a combination easier from a regulatory standpoint. Reuters also notes that Tesla’s China operations could be difficult to separate given the importance of the company's Shanghai factory to global production.
