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SpaceX\u2019s pending IPO reportedly scheduled for June will double Musk\u2019s publicly traded companies, joining Tesla as a target for investors betting on the CEO\u2019s moonshot goals around automation and space exploration. But rather than seeing twice the opportunity to cash in on a Musk-led enterprise, investors and analysts instead see red flags for Tesla stock.<\/p>\n
\u201cThis cannot be a positive for Tesla,\u201d Joe Gilbert, portfolio manager at Integrity Asset Management, told Bloomberg. \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
Tesla has had a difficult year: It saw the company\u2019s first full-year revenue decline in its history last year, and despite improved sales in the first three months of this year, deliveries have fallen below analysts\u2019 expectations, and production has continued to outpace sales. <\/p>\n
Tesla did not respond to Fortune\u2019s request for comment.<\/p>\n
Though its stock is down about 5% year-to-date, Tesla\u2019s stock trades well above what its fundamental performance reflects, according to analysts. Musk has recently touted Tesla as less of an electric vehicle producer and more of an AI and robotics company, exemplified by his projection that 80% of the company\u2019s total value will be represented in its humanoid Optimus robot, despite no evidence of the project\u2019s scaling, let alone to Musk\u2019s goal of an annual capacity of 1 million robots.<\/p>\n
SpaceX tells a different story. Among the stakeholders in conversations about putting data centers in space to scale the growth of AI, SpaceX has already shown promise of strong returns with Starlink, its satellite internet with more than 10 million subscribers, as well as its grip on the global orbital launch market, using reusable rocket boosters. The company\u2019s IPO prospectus reveals a full-year revenue of $18.7 billion in 2025, a 33% year-over-year increase from 2024, but also that its losses are expected to similarly swell as it looks to expand rapidly. With a projected $1.75 trillion valuation, SpaceX would dwarf even Tesla\u2019s $1 trillion worth.<\/p>\n
\u201cIt\u2019s sexy,\u201d Ross Gerber, a Tesla investor and CEO of investment firm Gerber Kawasaki, told Fortune. \u201cEverybody likes sexy things in the investment business.\u201d<\/p>\n
How does SpaceX\u2019s IPO make Tesla\u2019s troubles worse?<\/p>\n
SpaceX being the new belle of the ball will only mount pressure on Tesla, according to Dave Mazza, CEO of Roundhill Investments. Investors bought into Tesla in part because of its ambitions around AI and robotics, and SpaceX\u2019s success could undermine Tesla\u2019s vision.<\/p>\n
SpaceX\u2019s success will likely depend heavily on Musk\u2019s fanbase because, reportedly, 30% of its IPO may be allocated to retail investors, about three times the usual available for individuals, \u201cpulling directly from the same pool that has been Tesla\u2019s most loyal buyer base,\u201d Mazza said.<\/p>\n
\u201cTesla\u2019s valuation has never been justified by vehicles alone, and investors are paying for the autonomy and physical AI thesis,\u201d Mazza told Fortune. \u201cSpaceX\u2019s IPO sharpens that scrutiny, because investors will now have a cleaner, purer Musk innovation bet to benchmark against, which raises the bar for Tesla to actually deliver.\u201d<\/p>\n
Investors like Gilbert are also concerned about Musk\u2019s personal investment of time and energy into Tesla, suggesting a renewed focus on the aerospace company would sap attention from Tesla. The concerns echo those of investors last year, when Musk was a special government employee overseeing the Department of Government Efficiency (DOGE), admitting it was challenging to juggle so many projects, while also alienating a consumer base that has historically leaned to the left and sought after EVs.<\/p>\n
Mazza said this risk is present for all of Musk\u2019s projects, however, and isn\u2019t specific to SpaceX\u2019s IPO. If you\u2019re going to invest in a Musk-run company, you are buying with the understanding that he both brings value to the business, while also being largely responsible for its potential demise, he said.<\/p>\n
\u201cThat concern is already priced in, as Musk\u2019s divided attention has been a headline risk for years,\u201d Mazza said. \u201cThe more relevant question is execution: Tesla needs to deliver on robotaxi and autonomy on its own timeline, and SpaceX going public doesn\u2019t change that calculus one way or the other.\u201d<\/p>\n
Could SpaceX\u2019s merger help save Tesla?<\/p>\n
While SpaceX\u2019s IPO may be bad news for Tesla stock, it could ultimately be good for business, Gerber said. The aerospace company going public has increased speculation of these two companies merging, a move that would grow Musk\u2019s dominion over the AI market. SpaceX already owns Musk\u2019s xAI, and the companies are already working jointly on developing Terafab, a semiconductor plant in East Texas.<\/p>\n
A merger would simplify investor decisions to a simple binary, Gerber argued: If you believed in Musk\u2019s vision, you would buy shares, and if you didn\u2019t, you would invest elsewhere. But a merger would also shield Tesla from some investor scrutiny if other components of Musk\u2019s ventures found success, especially as the EV-maker\u2019s promises around full self-driving features have yet to come to fruition.<\/p>\n
\u201cThis period of time could be very difficult for Tesla, on top of the fact that now you\u2019re throwing out SpaceX,\u201d Gerber said. \u201cIn a typical Elon fashion, there\u2019s lots of messiness with all this, and how that all gets reconciled is through a merger.\u201d<\/p>\n
#SpaceX #IPO #bad #news #Tesla #stock #investors #warn<\/p>\n","protected":false},"excerpt":{"rendered":"
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