Why SpaceX's IPO could put pressure on Tesla's stock

By William Gavin

Some investors may choose to snatch up shares in Elon Musk's rocket maker instead of Tesla, an analyst warns

Tesla shares are about 28% cheaper compared with the stock's all-time high in December 2025.

SpaceX's planned initial public offering is expected to lift the sails of space-sector companies. But it could also act as a drain on shares of Tesla, the electric-vehicle giant that it shares a CEO with.

"[W]e would expect incremental investments in Elon Musk companies from both retail and institutions to prioritize SpaceX over [Tesla], potentially limiting support for [Tesla] shares as it tests key technical levels," Oppenheimer analyst Colin Rusch wrote in a note to clients on Monday.

Interest in SpaceX is expected to be blazing hot when the company officially announces its public listing, which is expected as soon as June. The rocket and satellite company is reportedly attempting to raise $75 billion or more at a valuation of $1.75 trillion, which could make it the biggest IPO in history.

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A $1.75 trillion market capitalization would make SpaceX the seventh most valuable U.S. company at current market prices. The company's market cap would be greater than two of the "Magnificent Seven" group of technology giants, including that of Tesla (TSLA), which is currently valued at $1.32 trillion. The other in the Magnificent Seven that would be behind SpaceX is Meta Platforms (META), which has a market cap of $1.6 trillion.

Seth Goldstein, an analyst at Morningstar who covers Tesla, told MarketWatch that he could see some investors trimming their portfolio in favor of SpaceX. There may also be some general volatility due to indexes rebalancing their holdings and as funds that track those indexes adjust their portfolio to match, Goldstein added.

Meanwhile, Oppenheimer's Rusch notes that Tesla shares are trading at "levels from late summer 2025 and could see a retrace to the low-$300's based on technical support levels near term."

In recent afternoon trading on Monday, Tesla's stock was down 28.2% from its record closing high of $489.88 on Dec. 16, 2025.

While SpaceX might offer a hot alternative, that may not be the only reason money currently invested in Tesla makes the switch.

Earlier this month, Tesla's released first-quarter EV sales and energy-storage product deployments that came in below expectations. Tesla is also preparing to spend heavily on new manufacturing plans and is widely expected to report in 2026 its first year of negative free cash flow since 2019, according to FactSet data.

As for Tesla's work on autonomous vehicles and driverless technology, Oppenheimer isn't too optimistic.

Rusch believes that Tesla will struggle to deliver autonomous driving at a level that regulators will accept without light detection and ranging - or lidar - technology, which Musk has criticized. The company aims to expand its robotaxi operation from two cities to nine by June.

See: Tesla's stock could fall another 60%, JPMorgan analyst warns. Here's what's behind his 'high degree of caution.'

Rusch added that he believes Tesla is struggling to make its third-generation Optimus robots have better functioning hands and more stability. A demonstration of the humanoid robot was delayed from last month to give Tesla more time to work on the "finishing touches," Musk said on March 31.

RBC Capital Markets analyst Tom Narayan noted on Friday that investor feedback on Optimus, a major aspect of Tesla's plans, has been cautious, citing competition from Chinese firms and concerns over humanoid robots as a whole. Narayan rates Tesla at outperform and slashed his price target to $480 per share from $500 per share.

"We do not see a clear growth driver until 2028 at the earliest for financials unless [Tesla] brings a lower cost EV model to market to scale up humanoid production," Rusch wrote. Last week, Reuters reported that Tesla was considering making a SUV that is smaller and cheaper than its Model Y.

-William Gavin

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04-13-26 1522ET