For years, mom-and-pop investors had only one way to buy into Elon Musk's vision: shares of Tesla Inc. That is about to change with the imminent initial public offering of Space Exploration Technologies Corp., better known as SpaceX. This new entry point for the "Muskonomy" poses a serious risk for Tesla investors, as Wall Street professionals anticipate a diversion of attention and capital away from the electric-vehicle maker and toward the shiny new space venture.
Impact on Tesla Shares
It will likely take around three months for SpaceX's impact to materialize in Tesla shares, as institutional investments shift slowly and early trading after an IPO can be messy. "This cannot be a positive for Tesla," said Joe Gilbert, portfolio manager at Integrity Asset Management. "We believe that Musk's focus will predominantly be lasered on SpaceX. Musk has proved to be able to balance multiple initiatives simultaneously in the past, but it feels like SpaceX is his new baby at the expense of Tesla."
The inherent competition between Tesla and SpaceX is a key reason why Musk is reportedly considering merging the two companies. Depending on perspective, Tesla appears to be either in a holding pattern or slight decline, with slowing sales growth and withering fundamentals. However, financial performance has never really been the driver behind the stock, which was seen as a proxy bet on Musk's ambitions. While shares are down 8.8% this year after soaring 265% from the beginning of 2023 to the end of 2025, they still trade at about 196 times earnings over the next 12 months, the second most expensive valuation in the S&P 500 Index.
Valuation and Competition
That sky-high multiple is based on investors' belief in Musk's ambition to transform Tesla into an autonomous vehicle and robotics company that also makes EVs. It is a crowded field. The EV business faces competition from Chinese manufacturers abroad and traditional gas guzzlers in the United States. Its robotaxis compete against Alphabet Inc.'s Waymo, which is already in operation, and numerous tech firms are working on building humanoid robot assistants. Still, Tesla's US$1.5 trillion market capitalization dwarfs its rivals. The combined market value of Rivian Automotive Inc. and Uber Technologies Inc. — among the leading competitors to Tesla's EVs and robotaxis — is about US$170 billion.
SpaceX, however, is different for several reasons. Its business is distinct from Tesla's, it is the clear leader in its field, and its growth potential appears boundless at the moment. "We expect SpaceX to come to market with an astronomical valuation, pun intended," said Gilbert, whose firm does not own Tesla because the stock does not meet its value investing criteria. "It has no true competitors." SpaceX may even end up with a loftier market capitalization than Tesla, according to Gilbert. "Any Musk company will always embed a call option in its valuation for vision," he added.
Retail Investor Sentiment
Musk has long been a fascination of the retail crowd, which comprises ordinary investors who buy stocks on their own. But even that enthusiasm seems to be waning. Since December, when SpaceX confirmed its intentions for a 2026 IPO, the stock has seen net retail inflows of about US$1 million according to data compiled by Vanda Research through May 18, with roughly equal days of inflows and outflows. This tepid interest suggests that retail investors may be waiting for the SpaceX IPO to allocate their funds, further pressuring Tesla's stock in the near term.
