<\/p>\n
For years, there was only one way for mom-and-pop investors to buy into Elon Musk\u2019s vision: shares of Tesla Inc. That\u2019s about to change \u2014 and it\u2019s a serious risk for Tesla investors.<\/p>\n
With the imminent initial public offering of Space Exploration Technologies Corp., better known as SpaceX, the market will have an additional entry point for the \u201cMuskonomy.\u201d Wall Street pros see investors\u2019 attention and capital inevitably being siphoned away from Musk\u2019s electric-vehicle maker and to his shiny new toy.<\/p>\n
\u201cThis cannot be a positive for Tesla,\u201d said Joe Gilbert, portfolio manager at Integrity Asset Management. \u201cWe believe that Musk\u2019s 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.\u201d<\/p>\n
Indeed, the seemingly inherent competition between Tesla and SpaceX is a key reason why Musk is reportedly considering merging the two companies.<\/p>\n
Depending on your perspective, Tesla appears to be either in a holding pattern or slight decline, with slowing sales growth and\u00a0withering fundamentals. But financial performance has never really been the driver behind the stock, which was seen as a proxy bet on Musk\u2019s ambitions. While the shares are down 8.9% this year after soaring 265% from the beginning of 2023 to the end of 2025, they still trade at about 195 times earnings over the next 12 months, the second most expensive valuation in the S&P 500 Index.<\/p>\n
That sky-high multiple is based on investors\u2019 belief in Musk\u2019s ambition to transform Tesla into an autonomous vehicle and robotics company that also makes EVs. It\u2019s a crowded field. The EV business faces competition from Chinese manufacturers abroad and traditional gas guzzlers in the US. Its robotaxis compete against Alphabet Inc.\u2019s Waymo, which is already in operation. And numerous tech firms are working on building humanoid robot assistants.<\/p>\n
Still, Tesla\u2019s $1.5 trillion market capitalization dwarfs its rivals. The combined market value of Rivian Automotive Inc., Uber Technologies Inc. and Boston Scientific Corp. \u2014 among the leading competitors to Tesla\u2019s EVs, robotaxis and robotics products \u2014 is about $250 billion.<\/p>\n
SpaceX, however, is different for a bunch of reasons. Its business is distinct from Tesla\u2019s, it\u2019s the clear leader in its field and its growth potential appears boundless at the moment.<\/p>\n
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\u201cWe expect SpaceX to come to market with an astronomical valuation, pun intended,\u201d said Gilbert, whose firm doesn\u2019t own Tesla because the stock doesn\u2019t meet its value investing criteria. \u201cIt has no true competitors.\u201d<\/p>\n
SpaceX may even end up with a loftier market capitalization than Tesla, according to Gilbert. \u201cAny Musk company will always embed a call option in its valuation for vision,\u201d he added.<\/p>\n
Musk has long been a fascination of the retail crowd, which is comprised of ordinary investors who buy stocks on their own. But even that enthusiasm seems to be waning. Since December, when SpaceX\u00a0confirmed its intentions\u00a0for a 2026 IPO, the stock has seen net retail inflows of about $1 million according to data compiled by Vanda research through May 18, with roughly equal days of inflows and outflows, according to data through May 13.<\/p>\n
Retail investors own about 40% of Tesla shares, according to estimates by BNP Paribas analyst James Picariello. The SpaceX IPO will weigh on the stock by \u201c\u2018splitting\u2019 the pro-Musk retail shareholder base,\u201d the analyst, who has an underperform rating on Tesla, wrote in a note to clients last month.<\/p>\n
That said, the SpaceX IPO could also \u201cstrengthen the broader \u2018Musk ecosystem\u2019 narrative,\u201d said Ivan Feinseth, chief investment officer at Tigress Financial Partners, which holds Tesla shares in accounts it manages for clients.<\/p>\n
\u201cTesla and SpaceX are fundamentally different businesses, and investors who believe in Musk\u2019s vision will want exposure to both,\u201d said Dave Mazza, chief executive officer of Roundhill Financial, which owns Tesla shares. \u201cHowever, SpaceX is the new shiny object, and we expect some capital will rotate\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b\u200b away from Tesla to SpaceX to capture the current excitement.\u201d<\/p>\n
It will likely take around three months for SpaceX\u2019s impact to materialize in Tesla shares, as institutional investments shift slowly and early trading after an IPO can be messy, said Nicholas Colas,\u00a0co-founder of DataTrek Research. Tesla also could benefit, at least initially, from its membership in the S&P 500, considering all of the passive investments that are tied to the index, Colas added.<\/p>\n
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For most companies, a 50-50 split between present and future value is baked into the stock price, according to Colas. Tesla is different, however, because it trades far more on Musk\u2019s dreams than the company\u2019s actual financial performance.<\/p>\n
\u201cFor Tesla, it has been 90-10 future-to-present value for as long as I\u2019ve looked at it,\u201d said Colas, who previously worked as an auto analyst. \u201cThe vast majority of that company\u2019s valuation is based on future hope, not current reality.\u201d<\/p>\n
Since that future hope hinges on Musk, it makes little sense to have two companies in the market with the same fundamental draw, Colas said, noting that a merger between them probably makes the most sense.<\/p>\n
\u201cIf I were advising anyone, I\u2019d be like, let\u2019s just get all this under one roof,\u201d Colas said. \u201cPeople want to own your vision, let\u2019s make it simple.\u201d<\/p>\n
Should they stay separate, however, the dynamic ultimately should benefit SpaceX over Tesla, since the former has \u201ca more clear, competitive advantage in its core business,\u201d he said.<\/p>\n
\u201cYou\u2019ve already got this big systematically important public company, and you\u2019re about to launch a second one,\u201d Colas said. \u201cI\u2019m not sure what the value is of having two. If your pitch is, Elon runs the company, then the best approach is to have one company.\u201d<\/p>\n
\u00a9\u00a02026\u00a0Bloomberg L.P.<\/p>\n
#SpaceX #IPO #adds #Musk #stock #problem #Tesla<\/p>\n","protected":false},"excerpt":{"rendered":"
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