Until now, for the average investor, there had been essentially one way to bet on Elon Musk’s ambitions: buy Tesla shares.
That single path is about to split into two. Musk’s space company SpaceX is nearing a stock market listing, and Wall Street sees that change as a meaningful risk signal for Tesla shareholders.
SpaceX is a company that launches rockets and operates satellites. Because it has not been publicly listed, ordinary investors have not been able to buy its shares. If the listing happens, that changes. Money seeking exposure to one individual, Musk, will have one more destination besides Tesla.
Musk money splits into two paths
What Wall Street analysts are watching is the possibility that investor attention and capital could flow out of Tesla.
Joe Gilbert, a portfolio manager at Integrity Asset Management, said bluntly that the listing cannot be a positive for Tesla. His concern is that Musk’s focus will shift toward the new company.
He noted that Musk has previously run multiple businesses at the same time, but that SpaceX now appears to have overtaken Tesla as his new object of affection.
This is not an unfounded concern. About 40% of Tesla’s shares are held by retail investors. In other words, ordinary people rather than institutions support nearly half of the stock’s value. A large share of them bought Tesla not because of the company’s business fundamentals, but because they were investing in Musk himself.
James Picariello, an analyst at BNP Paribas, said the SpaceX listing will split the retail shareholder base that backs Musk and weigh on Tesla’s stock price. BNP Paribas, a French investment bank, already has an underperform rating on Tesla, meaning it sees little chance the stock will rise even as much as the broader market.
SpaceX also stands out from other companies. It operates in a different sector from Tesla, is regarded as a clear leader in its field, and is seen as having substantial room to grow. Gilbert described SpaceX as having no true competitor. Even though it is another Musk company, its appeal to investors is different.
A price based on dreams, not earnings
To understand Tesla’s stock price, one must first understand one thing: the market value is not explained by the company’s actual earnings.
Tesla’s business performance is not especially bright. Sales growth has slowed, and the fundamentals that show a company’s underlying strength are no longer what they once were. The stock is down 8.8% so far this year.
Even so, its valuation based on expected earnings over the next 12 months is still 196 times earnings. That makes it the second most expensive stock in the S&P 500 index of America’s 500 largest companies.
What supports that lofty valuation is not hard numbers but expectations. Investors believe Musk will transform Tesla from an electric vehicle maker into a company that builds self-driving cars and robots.
Tesla FSD (source: screenshot from X @teslaZoa)
Nick Colas, co-founder of DataTrek Research, explained that for a typical company, current value and future value are each reflected about equally in the stock price, but for Tesla, hope for the future has accounted for 90% of the value. In other words, the company’s present is not what is being priced, but Musk’s vision.
However, the path to that future is already crowded with rivals. Tesla’s EV business faces Chinese challengers abroad and legacy internal combustion vehicles in the U.S.
Its robotaxi business is competing with Alphabet’s Waymo, which is already operating services. Humanoid robots are also a field crowded with many technology companies.
Tesla’s market capitalization, at around $1.5 trillion, dwarfs its rivals, but there is no guarantee that gap will last forever. Even the combined market values of Rivian and Uber, major competitors in electric vehicles and robotaxis, amount to only about $170 billion.
Two companies selling the same dream: why merger talk is emerging
The problem is that this hope depends entirely on Musk alone.
Colas takes the argument one step further. If Tesla’s value is determined not by its earnings but by Musk’s dream, then there is little reason for two companies with the same appeal to exist separately in the public markets.
He said that if someone asked for his advice, he would say to put all the businesses under one roof. If what people want to buy is Musk’s vision, then keeping the companies together would be simpler and clearer. That is the background behind speculation that Musk is considering a merger between Tesla and SpaceX.
Not all forecasts are negative. There is also a more optimistic view. Ivan Feinseth, chief investment officer at Tigress Financial Partners, said the SpaceX listing could actually strengthen the notion of a “Musk ecosystem.”
Tesla and SpaceX are fundamentally different businesses, and investors who believe in Musk’s vision may want both. Still, he acknowledged that because the newly listed company would shine more brightly, some capital would likely move from Tesla to SpaceX.
It will take time for the impact of the listing to show up in Tesla’s stock price. Institutional money moves slowly, and trading immediately after a listing tends to be chaotic.
In the meantime, Tesla can draw support for a while from being part of the S&P 500. Massive flows of money that track the index mechanically will continue buying Tesla shares.
The SpaceX listing is a test case for what happens when two stocks built on one person’s vision exist in the market at the same time.
If the two companies ultimately go their separate ways, the competitive weight is likely to favor SpaceX over Tesla.
That is because SpaceX holds a clearer advantage in its core business. For Korean investors as well, this is not someone else’s problem.
Musk’s companies have consistently been among the most-bought foreign stocks by domestic individual investors. It may not be only Wall Street money that is splitting apart.