Will the SpaceX IPO Be Bad News for Tesla's Stock?
Key Points
SpaceX stock could be trading publicly as early as this summer.
At a potential $1.75 trillion valuation, SpaceX will likely be worth much more than Tesla.
Tesla has been struggling to generate much growth in recent years, and frustrated investors may ditch the stock.
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The SpaceX IPO is coming this year, and it could easily be one of the hottest new stocks to own, especially for Elon Musk fans. The company might be valued at $1.75 trillion, which analysts believe could be justifiable due to the company's robust Starlink satellite business and the recurring revenue it generates.
There will undoubtedly be plenty of excitement around the new IPO, which could come as early as this summer. But could the IPO be bad news for another popular Musk stock -- Tesla (NASDAQ: TSLA)?
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Could Tesla fall out of favor with Musk's followers?
A big reason Tesla has commanded a massive valuation of its own is not only the long-term hope for its business's continued growth, but also the investment in Musk's vision, which goes beyond electric vehicles (EVs), which make up the lion's share of Tesla's revenue today. At $1.3 trillion, Tesla is one of the most valuable companies in the world, but it would still be much smaller in size than SpaceX's rumored valuation. However, Tesla's price tag remains fairly high given its level of earnings; its price-to-earnings multiple is around 320. Investors will get a better idea of how expensive SpaceX is when its financials are released.
Musk's followers might not be as willing to own Tesla stock if there's a more attractive growth stock to own in the way of SpaceX. In 2025, Tesla's revenue declined by 3%, and the top line rose by only 16% over the span of three years. Growing competition in the EV space has led to tighter margins and worsening prospects for earnings growth in the future. Pivoting to a more promising company in SpaceX could indeed motivate investors to ditch their Tesla shares once and for all.
Is Tesla's stock destined to fall further this year?
Thus far in 2026, shares of Tesla have fallen 22% and are down 30% from their 52-week highs. The company recently fell short of analyst expectations for deliveries during the first quarter, which has given investors yet another reason to be bearish on the EV stock.
Between a high valuation, troubling financial results, and concerning industry conditions, multiple factors could weigh on the stock as the year goes on. The SpaceX IPO could give investors even more incentive to sell Tesla shares this year.
Unfortunately, with Tesla's high valuation, there's significant downside risk to its stock, which is why I'd be wary of buying it at its current price. Even though it has fallen significantly in value this year, I wouldn't be surprised to see Tesla's stock fall further in the weeks and months ahead.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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