Key Takeaways
- Tesla shares slid approximately 3% on Monday amid growing anxiety that the SpaceX public offering will redirect investment away from the electric vehicle manufacturer.
- The EV maker currently commands a valuation of approximately 195 times forward earnings — ranking as the S&P 500’s second priciest stock.
- With retail shareholders controlling roughly 40% of Tesla’s equity, market observers caution that SpaceX’s debut will fragment the Musk-devoted investor community.
- SpaceX holds an unchallenged position in its sector with minimal rivals, potentially positioning it as a more compelling Musk investment than Tesla.
- Discussion of a possible Tesla-SpaceX combination has surfaced, partially motivated by concerns over competing for the same investor dollars.
Tesla (TSLA) shares declined approximately 3% during Monday’s trading session, continuing a five-day downward trend totaling roughly 8%, as market participants focused on the approaching SpaceX public offering and its implications for Tesla shareholders.
For many years, Tesla has represented the sole publicly accessible vehicle for mainstream investors to gain exposure to Elon Musk. That exclusivity is poised to end.
As SpaceX moves toward its stock market launch, financial experts are sounding alarms that investment capital — along with Musk’s attention — may start gravitating toward his aerospace venture rather than his automotive enterprise.
“This development cannot benefit Tesla in any way,” stated Joe Gilbert, portfolio manager at Integrity Asset Management. “It appears SpaceX has become his priority focus to Tesla’s detriment.”
Tesla has declined 8.8% so far in 2025, yet it maintains a forward earnings multiple of approximately 195 — making it the S&P 500’s second most expensive equity. That elevated valuation has historically reflected Musk’s vision rather than Tesla’s actual financial performance.
Questioning the Musk Valuation Edge
Tesla’s investment thesis depends heavily on its self-driving technology and robotics initiatives. However, competition in this arena is intensifying, with Alphabet’s Waymo already operating autonomous taxi services at commercial scale while Chinese electric vehicle producers persistently capture Tesla’s global market share.
SpaceX presents a contrasting narrative. Market analysts characterize it as an undisputed industry frontrunner facing virtually no meaningful competition and possessing seemingly unlimited expansion possibilities.
“We anticipate SpaceX will enter public markets commanding an extraordinary valuation,” Gilbert noted. “It faces no legitimate rivals.”
Retail shareholders, who control an estimated 40% of Tesla according to BNP Paribas analyst James Picariello, face the greatest exposure to this shift. Picariello, who maintains an underperform stance on Tesla, indicated last month that SpaceX’s market entry will pressure the stock by dividing Musk-enthusiastic retail participants.
Signs of Capital Shifting Already Emerging
Dave Mazza, CEO of Roundhill Financial, stated directly: “SpaceX represents the latest exciting opportunity, and we anticipate some investment dollars will migrate from Tesla toward SpaceX to participate in the current momentum.”
Nicholas Colas from DataTrek Research calculates that Tesla’s market value derives roughly 90% from future projections and merely 10% from present operations. When those forward-looking expectations center on a single individual, listing two separate companies presents a genuine challenge.
Since December, when SpaceX announced IPO intentions for 2026, Tesla has attracted only approximately $1 million in net retail investment flows — a remarkably subdued figure considering the historical fervor surrounding Musk-associated opportunities.
Colas and fellow analysts propose that combining the two entities might represent the most straightforward resolution. “Investors want access to your complete vision, so simplify it for them,” he remarked.
Tesla’s inclusion in the S&P 500 index might offer some near-term stability through automatic purchases by passive index funds. However, Colas projects the SpaceX IPO’s full consequences will materialize in Tesla’s share price over approximately three months.
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