TLDR
- Tesla stock dropped around 3% Monday as the SpaceX IPO sparked investor concerns about capital being diverted away from the EV maker.
- Tesla currently trades at roughly 195 times forward earnings — the second most expensive stock in the S&P 500.
- Retail investors own about 40% of Tesla stock, and analysts warn the SpaceX listing will “split” that pro-Musk base.
- SpaceX is seen as a direct industry leader with little competition, potentially making it a more attractive Musk bet than Tesla.
- A potential merger between Tesla and SpaceX is reportedly being considered, partly driven by the investment overlap problem.
Tesla (TSLA) stock fell around 3% on Monday, extending a five-day slide of roughly 8%, as Wall Street turned its attention to the looming SpaceX IPO and what it means for Tesla investors.
For years, Tesla has been the only publicly traded way for ordinary investors to bet on Elon Musk. That is about to change.
With SpaceX heading toward a market debut, analysts are warning that investor capital — and Musk’s own focus — could begin shifting toward his rocket company and away from his electric vehicle business.
“This cannot be a positive for Tesla,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “It feels like SpaceX is his new baby at the expense of Tesla.”
Tesla is down 8.8% in 2025 year-to-date, though it still carries a valuation of about 195 times forward earnings — the second most expensive stock in the S&P 500. That premium has always been about Musk’s ambitions more than Tesla’s financials.
The Musk Premium Under Pressure
The bull case for Tesla rests on its autonomous vehicle and robotics roadmap. But that space is getting crowded, with Alphabet’s Waymo already running robotaxis commercially and Chinese EV manufacturers continuing to eat into Tesla’s global market position.
SpaceX is a different story. Analysts describe it as a clear leader in its field with minimal competition and what looks like open-ended growth potential.
“We expect SpaceX to come to market with an astronomical valuation,” Gilbert said. “It has no true competitors.”
Retail investors, who own an estimated 40% of Tesla according to BNP Paribas analyst James Picariello, are the most exposed to this dynamic. Picariello, who holds an underperform rating on Tesla, wrote last month that the SpaceX IPO will weigh on the stock by splitting the pro-Musk retail investor base.
Capital Rotation Already a Concern
Dave Mazza, CEO of Roundhill Financial, put it plainly: “SpaceX is the new shiny object, and we expect some capital will rotate away from Tesla to SpaceX to capture the current excitement.”
Nicholas Colas of DataTrek Research estimates Tesla’s valuation is roughly 90% based on future expectations and only 10% on current performance. When those future expectations are tied to one person, having two companies listed creates a real problem.
Since December, when SpaceX confirmed IPO plans for 2026, Tesla has seen only about $1 million in net retail inflows — a notably flat number given the historical enthusiasm for anything Musk-related.
Colas and others suggest a merger between the two companies may be the cleanest solution. “People want to own your vision, let’s make it simple,” he said.
Tesla’s S&P 500 membership may provide some short-term cushion through passive index fund flows. But Colas expects the full impact of the SpaceX IPO to take about three months to filter through to Tesla’s stock price.
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