If SpaceX and Tesla Merge, How Much of It Is Still Space?

BY PROCUREAM RESEARCH

For most of the modern space era, the biggest name in commercial space was one you could not buy. That changed in June, when SpaceX* listed on the Nasdaq.¹

Within weeks the conversation moved from what is it worth to what does Elon Musk do with it. Analysts published odds. Prediction markets opened books. When the merger question reached Tesla’s second quarter earnings call in July, the answer was neither yes nor no.²

It’s a great story, and it belongs to the people covering Musk. Sitting underneath it is a quieter question that gets almost no airtime, and it happens to be the one a rules-based investment approach has to answer whether it wants to or not.

Here it is. If a space company combines with a company that is not a space company, is what comes out the other side still a space company?

A stock picker answers that with guess work. A rules-based approach answers it with arithmetic. That gap is the entire reason rules-based investing exists.

UFO does not ask whether a company is in space. It asks how much.

The Procure Space ETF^® follows a published methodology, and UFO’s eligibility rules run a revenue test before anything else. A company qualifies when space is not a side project but the business itself, meaning it derives at least half its revenue or profits from a space industry segment.³

The UFO prospectus draws the line with a comparison worth stealing. A GPS smartwatch is not a product without satellites overhead. A car with GPS navigation is still a car. One company is space. The other has space in it. The test can tell the difference, and it does not need anyone’s opinion to do so.

Then a second mechanism kicks in. Weighting inside UFO is modified by float and by space revenue percentage. A constituent is not sized purely by how big it is. It is sized by how much of what it does happens because of space.

Why that structure matters when the map redraws

A merger changes a denominator. Combine any space business with a large enough non-space business and the share of revenue that traces back to orbit gets smaller, even though not a single satellite came out of the sky.

A methodology built on general labels has no way to register that. One built on proportion registers it automatically, at the next reconstitution, in a number.

A methodology built on general labels would have no way to register that. One built on proportion registers it automatically, at the next reconstitution, in a number. It does not need a view on whether the deal is smart, whether the price is fair, or whether the combination works. It only needs to measure what is left.

That is the part most coverage misses. The interesting question about consolidation in space is not who buys whom. It is what a portfolio built on a definition does when the definitions start moving.

What this looks like in practice

As of September 22nd, 2026, the Procure Space ETF^® held 65 securities.³ Names enter and exit as UFO reruns its tests. No one at a desk decides that a company has stopped being a space company. The methodology decides, and it shows its work.

For an investor, that is worth understanding before the next headline lands. The space economy is entering a phase where the biggest players are large enough to buy things far outside their own industry. Some of those combinations will keep a company squarely inside the space economy. Some will not. A rules-based approach is not a prediction about which is which. It is a commitment to keep measuring, publicly, on a schedule.

The market will spend the next year arguing about what Musk should do. UFO will spend it doing the same thing it did last year, which is checking the math.

¹ Morningstar, “What Happens If Tesla and SpaceX Merge?” https://www.morningstar.com, June 2026
² CNN Business, “Will SpaceX buy Tesla? Musk is not revealing his plans,” https://www.cnn.com, July 2026
³ ProcureAM, www.procureetfs.com/ufo, September 2026

Important Information

*As of September 22nd, 2026, Space Exploration Technologies Corp (SPCX) was a 14.75% holding in the Procure Space ETF^® (NASDAQ: UFO).

For a complete list of holdings in UFO, visit: https://procureetfs.com/ufo/. Fund holdings and sector allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.

Please consider the Fund’s investment objectives, risks, and charges and expenses carefully before you invest. This and other important information is contained in the Fund’s summary prospectus and prospectus, which can be obtained by visiting procureetfs.com. Read carefully before you invest.

Investing involves risk. Principal loss is possible. The Fund is also subject to the following risks: Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the funds. Brokerage commissions will reduce returns.

Aerospace and defense companies can be significantly affected by government aerospace and defense regulation and spending policies. The exploration of space by private industry and the harvesting of space assets is a business based in future and is witnessing new entrants into the market. Investments in the Fund will be riskier than traditional investments in established industry sectors. The Fund is considered to be concentrated in securities of companies that operate or utilize satellites which are subject to manufacturing delays, launch delays or failures, and operational and environmental risks that could limit their ability to utilize the satellites needed to deliver services to customers. Investing in foreign securities are volatile, harder to price, and less liquid than U.S. securities. Securities of small- and mid-capitalization companies may experience much more price volatility, greater spreads between their bid and ask prices and significantly lower trading volumes than securities issued by large, more established companies. The Fund is not actively managed so it would not take defensive positions in declining markets unless such positions are reflected in the underlying index. Please refer to the summary prospectus for a more detailed explanation of the Funds’ principal risks. It is not possible to invest in an index.

UFO is distributed by Quasar Distributors LLC.