Should You Buy Upcoming SpaceX or Buy Tesla After a 20% Pullback Now?

TradingKey - According to media reports, Tesla (TSLA.US) SpaceX, founded by Elon Musk, plans to submit its IPO prospectus to regulators later this week or next week, potentially raising over $75 billion—exceeding the previously reported $50 billion. The company's latest valuation is $1.25 trillion, lower than the previously reported $1.75 trillion, with a target listing date in June.

According to market interpretations, as Musk's birthday also falls in June, the IPO is intended as a symbolic gift for him.

As the most high-profile global IPO of 2026, SpaceX's fundraising scale will break the $29.4 billion record set by Saudi Aramco in 2019, becoming the largest IPO in history.

It should be noted that both SpaceX and Tesla are companies under Musk. The market focus is on whether the SpaceX IPO will displace Tesla's 'protagonist premium,' leading to a share price decline, or if synergistic capital influences will cause it to rise in tandem with SpaceX stock.

Meanwhile, should investors buy the upcoming SpaceX IPO or the continuously falling Tesla?

How can retail investors buy SpaceX stock?

Since SpaceX has not yet gone public and investment opportunities are difficult for retail investors to access, ordinary investors still have the chance to participate in SpaceX through ETF allocations and indirect investments. TradingKey CEO Yeap Ming Feng, in the article "How to Invest in SpaceX IPO Before It Launches," detailed how retail investors should position themselves before the SpaceX IPO.

First, retail investors can indirectly participate in SpaceX's potential IPO through the Baron First Principles ETF (RONB), which holds a substantial 14.9% stake in SpaceX, and the Scottish Mortgage Investment Trust (SMT), which holds a 15.1% stake. These funds offer diversified exposure to both private and public companies.

Furthermore, investing in companies that directly or indirectly hold shares in SpaceX, or in SpaceX suppliers such as Alphabet, EchoStar, STMicroelectronics, Garmin, Iridium Communications, or Rocket Lab, is another investment route.

Should investors buy Tesla right now?

Tesla is grappling with a triple blow of AI-related anxiety, softening sales in its core electric vehicle business, and the fading allure of its "future vision" narrative; the share price has retreated from a high of nearly $500 to $383 (as of the March 24 close, ET), a drop of over 20% from its peak.

For now, Tesla's "future narrative" premium remains; its P/E ratio of 354x is significantly higher than that of traditional carmakers and most growth-oriented tech stocks. The core logic supporting this premium is not current profitability but the valuation of its future business lines, including growth drivers like Full Self-Driving (FSD), humanoid robots, and energy services.

Regarding FSD, although Elon Musk has repeatedly stressed that commercialization is nearing, large-scale deployment faces significant uncertainty regarding regulatory hurdles and technological maturity. Autonomous driving is not just a technical challenge but involves legal liability, data security, and policy approvals, suggesting its monetization cycle could be much longer than market expectations.

Additionally, the humanoid robot business remains in a "narrative-driven" stage. While Tesla has unveiled the Optimus prototype, there is a long road ahead—spanning engineering capabilities, cost control, and practical use cases—before a scalable business model emerges. Without clear revenue contributions, this segment functions more like a long-term call option.

In the long term, Tesla's future is full of potential, but investors must evaluate their tolerance for short-term price swings before buying. Historical performance suggests Tesla's stock is highly volatile, even after the current 20% correction from its highs.

Should investors buy SpaceX?

From a business structure perspective, while Starlink has achieved some scale in revenue, its capital expenditures are extremely high, and with long satellite launch, maintenance, and replacement cycles, it is difficult to generate stable free cash flow in the short term. Meanwhile, although the rocket launch business has high technical barriers, the overall market size is limited, making it difficult to support an exceptionally high valuation on its own.

Second, from a temporal dimension, the commercial aerospace logic represented by SpaceX is essentially a "long-cycle, capital-intensive" sector. Both the refinement of the global satellite internet network and the commercialization of deep space exploration require significant time to materialize. This means its valuation primarily reflects "long-term expectations" rather than verifiable short-term performance.

In this context, should SpaceX proceed with an IPO in the future, its first-day trading would likely suffer from an "excessive sentiment premium." Intense market interest could create a significant valuation bubble during the initial listing period, resulting in a risk-reward asymmetry—limited upside potential combined with significantly magnified downside risk.

Therefore, from a strategic standpoint, the more rational approach currently is not to "bet directly on SpaceX," but to allocate through the supply chain and companies with indirect holdings to capture beta returns from the commercial aerospace sector while mitigating the valuation volatility risks associated with a single security.

Investing in SpaceX-related assets and ETFs—such as companies that directly or indirectly hold SpaceX shares, or suppliers like Alphabet, EchoStar, STMicroelectronics, Garmin, and Iridium Communications—carries significantly lower risk than a direct investment in SpaceX itself.

Ultimately, while the future envisioned by SpaceX is undeniably compelling, its investment logic behaves more like a "long-dated option" than a growth asset capable of short-term realization.