SpaceX has reportedly hired Goldman Sachs for the lead left position on its IPO prospectus. The eventual listing is expected to make Elon Musk the world’s first trillionaire, but markets have been jittery about Tesla (TSLA) stock ahead of the IPO, as there are fears that many investors, who hitherto had only Tesla as a publicly traded play on Musk, would ditch the stock to buy SpaceX instead.
Joe Gilbert, portfolio manager at Integrity Asset Management, said that the eventual SpaceX IPO “cannot be a positive for Tesla.” While he acknowledged that, in the past, Musk has balanced his commitments across his different companies, he believes that “it feels like SpaceX is his new baby at the expense of Tesla.”
More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.
Tesla Stock Falls Ahead of the Imminent SpaceX IPO
The fears might not be unfounded as the world’s richest person holds an estimated 43% stake in SpaceX, while his Tesla ownership is just about 12%. In fact, Musk has long argued that he needs greater voting rights at Tesla so that he is comfortable building AI products at the company without fear of being booted out by activist investors.
Given the kind of valuations that’s been floating around for SpaceX, the company would account for the bulk of Musk’s net worth, and his financial interests would be more aligned with growing the company, which some believe would mean he focuses less on Tesla.
To be sure, Musk’s association with multiple companies has always been a risk for Tesla investors, and it was among the reasons critics opposed his $1 trillion Tesla pay package, arguing that even that fat pay cannot ensure his time commitment to the electric vehicle maker. Tesla has never been a shining example of good corporate governance practices, and in 2024, Tesla shareholders sued Musk for starting a competing AI company at a time when the electric vehicle maker was itself pivoting to AI.
Moreover, Tesla's electric vehicle business has sagged over the last couple of years, with deliveries falling in both 2024 and 2025. There is the novelty angle to SpaceX, and unlike Tesla, its core business is not facing challenges.
Both Tesla and SpaceX Offer Different Investing Themes
Meanwhile, I believe the concerns about retail investors dumping Tesla lock-stock-and-barrel to buy SpaceX are a bit overblown, particularly as the stock is trading significantly below its all-time highs. Tesla has created tremendous wealth for investors since its IPO, and while some investors might still exit the stock to fund their purchase of SpaceX stock, there should be enough buying support for Tesla below the $400 price levels.
www.barchart.comBoth Tesla and SpaceX are different stories, and I believe Musk fans as well as institutions would have the appetite for both in their portfolios. For most, it might not be a question of Tesla or SpaceX but Tesla and SpaceX.
Should You Buy Tesla Stock?
Tesla stock has slipped from its recent highs and is back near $400 levels. For valuation purists, the stock would always look expensive as it trades at triple-digit forward price-to-earnings (P/E) multiples with its market cap outstripping the combined market cap of all leading automakers.
However, Tesla is increasingly an AI play, and these products, particularly Optimus humanoid and self-driving/robotaxis, would add long-term value for the company. Musk is at the “global AI high table,” alongside Sam Altman and Jensen Huang, which could enable Tesla’s AI initiatives.
As for Musk heading both SpaceX and Tesla, I believe it is both an opportunity and a challenge. These companies have a lot of potential to collaborate on AI, something which is already happening with both Tesla and SpaceX partnering for Terafab. Moreover, Musk’s financial interests are aligned with the success of both Tesla and SpaceX as his pay packages are linked to the companies achieving key milestones.
Overall, I believe the risks of Tesla stock crashing because of the SpaceX IPO are a bit unfounded, and any decline in the shares on account of the event would be a good buying opportunity.
www.barchart.com On the date of publication, Mohit Oberoi had a position in: TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
Everyone’s Turning Bearish on Tesla Ahead of SpaceX IPO. Be a Contrarian and Buy TSLA Stock Instead. XPeng Is Making a Bold Bet on Robotaxis That Investors Cannot Afford to Ignore The DexCom Stock Turnaround Is Showing Real Signs of Life You’ve Likely Never Heard of Caris Life Sciences Stock. Billionaire Stanley Druckenmiller Has – and He Likes What He Sees.