Investors May Favor SpaceX Over Tesla, Analyst Warns
- The potential initial public offering (IPO) of SpaceX could create significant downward pressure on Tesla's stock as investors seek a more attractive growth vehicle within Elon Musk's portfolio...
- SpaceX may begin trading publicly as early as the summer of 2026.
- At a rumored $1.75 trillion valuation, SpaceX would be significantly larger than Tesla, which is currently valued at $1.3 trillion.
The potential initial public offering (IPO) of SpaceX could create significant downward pressure on Tesla’s stock as investors seek a more attractive growth vehicle within Elon Musk’s portfolio of companies.
SpaceX may begin trading publicly as early as the summer of 2026. Analysts suggest the company could be valued at $1.75 trillion, a figure driven largely by the recurring revenue and growth of its Starlink satellite business.
Valuation Divergence Between SpaceX and Tesla
At a rumored $1.75 trillion valuation, SpaceX would be significantly larger than Tesla, which is currently valued at $1.3 trillion. This disparity comes as Tesla faces challenges in maintaining its previous growth trajectory.
Tesla’s valuation has historically been supported by investor belief in Musk’s broader vision beyond electric vehicles. However, the company’s financial performance has shown signs of strain. In 2025, Tesla’s revenue declined by 3%, and its top line grew by only 16% over a three-year period.
Market analysts note that Tesla’s price-to-earnings multiple is approximately 320, which remains high relative to its earnings. The introduction of a public SpaceX stock could divert “Musk followers” and growth-oriented investors away from Tesla if SpaceX is perceived as a more compelling investment.
Market Pressures and Competitive Landscape
The electric vehicle sector has seen increasing competition, which has resulted in tighter margins and worsening prospects for Tesla’s future earnings growth.
Beyond the IPO, other factors have impacted Tesla’s market perception. Michael Burry has described Tesla as Lord of the tragic tier
and argued that Elon Musk’s stock-based compensation package is large enough to distort earnings indices for other heavy users of such compensation.
Risks of a Potential Merger
While an IPO is the primary focus, analysts have also weighed the implications of a potential merger between Tesla and SpaceX. Gary Black, managing partner at The Future Fund, has warned that such a deal could result in a substantial loss of value.
Black suggests that merged companies typically trade at the lower of the two valuation multiples rather than a blended premium, unless they achieve a rare Buffett premium
similar to Berkshire Hathaway.
According to Black’s assumptions, if Tesla issued $1.5 trillion in equity to acquire SpaceX, the combined valuation could drop from approximately $3 trillion to $2.25 trillion. This would imply a downside of roughly 25%, or a loss of $750 billion in value.
Black further noted that a merger would increase Tesla’s exposure to the space and satellite sectors, a move that some institutional investors might avoid.
Investor Outlook
The release of SpaceX’s financial statements accompanying its IPO prospectus will provide investors with a clearer understanding of the company’s actual costs and valuation. This transparency may further influence the movement of capital between the two Musk-led entities.
Tesla’s stock has recently shown volatility, including a slide of over 3% on Friday, April 4, 2026, to $367.96, which marked its lowest level in more than six months.