Tesla (TSLA) Stock Faces New Challenge as SpaceX IPO Looms

Key Takeaways

• TSLA shares declined approximately 3% Monday following investor anxiety about the upcoming SpaceX public offering potentially diverting funds from Tesla.
• The electric vehicle manufacturer trades at approximately 195x forward earnings — ranking as the S&P 500’s second priciest stock.
• With retail shareholders holding roughly 40% of TSLA, market watchers caution the SpaceX debut could fragment the Musk-loyal investor community.
• Industry observers view SpaceX as an uncontested sector leader, possibly representing a more compelling Musk investment than Tesla.
• Discussion of a possible Tesla-SpaceX combination has emerged, partially motivated by concerns over competing investment priorities.

Shares of Tesla (TSLA) declined approximately 3% during Monday’s trading session, continuing a five-session downturn totaling roughly 8%, as market participants digested implications of SpaceX’s anticipated public offering for existing Tesla shareholders.

Tesla, Inc., TSLA

For years, Tesla has represented the sole public market vehicle for everyday investors seeking exposure to Elon Musk’s business empire. That monopoly is poised to end.

As SpaceX advances toward its stock market launch, market analysts are cautioning that investment dollars — along with Musk’s strategic attention — may increasingly gravitate toward his aerospace venture rather than his automotive enterprise.

Tesla has declined 8.8% during the 2025 calendar year to date, despite maintaining a valuation near 195 times projected earnings — positioning it as the S&P 500’s second most richly valued equity. This premium pricing has consistently reflected Musk’s vision rather than Tesla’s underlying financial performance.

Questioning the Musk Valuation Multiple

The optimistic investment thesis for Tesla centers on its self-driving vehicle technology and robotics development pipeline. However, this arena is becoming increasingly competitive, with Alphabet’s Waymo already operating commercial autonomous taxi services while Chinese electric vehicle producers steadily capture Tesla’s international market share.

SpaceX presents a contrasting narrative. Market experts characterize it as an undisputed industry frontrunner facing minimal competitive pressure with seemingly unlimited expansion possibilities.

Retail market participants, who control an estimated 40% of Tesla according to BNP Paribas analyst James Picariello, face the greatest exposure to this shifting dynamic. Picariello, who maintains a negative rating on Tesla shares, indicated last month that SpaceX’s public listing will pressure the stock by fragmenting the Musk-supporting retail shareholder base.

Investment Reallocation Fears Mount

Nicholas Colas from DataTrek Research calculates that Tesla’s market value derives approximately 90% from future projections and merely 10% from present-day results. When those forward-looking expectations revolve around a single individual, maintaining two separate public companies creates genuine complications.

Since December, when SpaceX announced its 2026 IPO timeline, Tesla has attracted merely $1 million in net retail investor inflows — a remarkably subdued figure considering the historical fervor surrounding Musk-affiliated opportunities.

Tesla’s inclusion in the S&P 500 index may offer temporary protection through automatic purchases by passive index funds. However, Colas projects the SpaceX IPO’s complete effect will require approximately three months to fully materialize in Tesla’s share price.

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