Tesla (NASDAQ: TSLA) shares declined approximately 2.4% in late morning trading on Friday, as SpaceX (NASDAQ: SPCX) made its highly anticipated public market debut at $150 per share. The move has fueled speculation that some investors may be reallocating capital from Tesla into SpaceX, contributing to recent volatility in the electric vehicle maker's stock.
SpaceX opened at $150, below earlier indications near $175 but still roughly 11% above its IPO price of $135. The stock quickly climbed above $160, pushing the company's market capitalization past $2 trillion. The debut marks a historic milestone for Elon Musk, whose net worth has surged to over $1 trillion, as reported by TheInvestFeed.
Investor Rotation or Coincidence?
Gary Black, managing partner at The Future Fund, noted on social media that many retail investors buying SPCX this week may lighten their TSLA positions to fund the purchase. Tesla shares have swung more than 3% in either direction during each of the past five trading days, with market participants increasingly linking the turbulence to SpaceX's blockbuster offering.
Research firm Trefis highlighted that SpaceX's public debut creates a direct comparison between Musk's two largest corporate bets. "SpaceX hits public markets today at a touted $1.75 trillion valuation, and for the first time, investors have to choose between two of Musk's biggest bets – SpaceX and Tesla – rather than just one," the firm said.
Valuation Divergence: Sales Multiples Tell a Story
Both companies trade primarily on future expectations, but the nature of those expectations differs significantly. According to Trefis, SpaceX enters public markets with a valuation exceeding 90 times trailing sales, compared with Tesla's roughly 14 times sales multiple. While both metrics imply lofty valuations, investors are buying very different business models.
SpaceX generated $18.7 billion in revenue during 2025, with Starlink contributing $11.4 billion. The satellite internet business delivered a 63% EBITDA margin while revenue grew 86% year over year. Although SpaceX reported a consolidated net loss of $4.9 billion, much of that stemmed from losses at xAI, which recorded a $6.4 billion operating deficit as it expanded data center capacity and AI infrastructure. Excluding xAI, the company's financial profile appears substantially stronger.
Tesla's Bull Case Shifts from EVs to AI
Tesla's investment case has evolved considerably from its early years as an electric vehicle disruptor. The company reported 2025 revenue of $94.8 billion, down 3% from the previous year. Automotive revenue declined 10% to $69.5 billion, marking Tesla's first annual revenue contraction. Vehicle deliveries fell 9%, while operating margins continued a multi-year decline. Competition has intensified as Chinese automaker BYD overtook Tesla as the world's largest electric vehicle seller in 2025, delivering 2.26 million vehicles.
As a result, investors have increasingly shifted their focus away from Tesla's car business and toward future projects such as robotaxis, autonomous driving software, and the Optimus humanoid robot. Trefis argued that the company's bull case now depends largely on those initiatives. "So the bull case has shifted — from EV leader to physical AI company. It now rests on the Optimus robot and the robotaxi network. The problem is that none of these is a slam dunk," the firm said. The report also highlighted growing competition in autonomous driving, noting that Alphabet's Waymo currently operates more fully autonomous taxis and has accumulated more real-world driverless miles.
SpaceX's Operational Momentum
By contrast, SpaceX's core operations are already producing tangible results. Starlink's subscriber base expanded from 2.3 million users in 2023 to 8.9 million by the end of 2025 before reaching 10.3 million by March 2026 across 164 countries. The company recently increased Starlink subscription prices, a move analysts interpreted as evidence of growing pricing power. The launch business remains another major competitive advantage. SpaceX increased launches from 98 in 2023 to 170 in 2025 and currently controls roughly 60% of the global launch market. Competitors remain years behind in reusable rocket technology, reinforcing SpaceX's dominant position.
The biggest uncertainty within SpaceX remains xAI. While the unit generated $3.2 billion in revenue last year, it also posted substantial operating losses. Nevertheless, Trefis noted that the business is already monetizing data-center capacity through contracts with major technology firms, including Google and Anthropic. Longer term, investors are closely watching SpaceX's ambitions around orbital data centers, which could eventually provide computing capacity in space. The concept remains speculative, but proponents argue it could offer significant advantages in cooling efficiency and energy economics.
Which Musk Bet Is the Better Buy?
Analysts remain divided. Trefis concluded: "SpaceX is expensive because it's winning. Tesla is expensive because investors are hoping it will. SpaceX at $135 is not cheap. At 90x sales, it may not even be a good investment. But between the two Musk narratives, it is the one with more evidence, stronger moats, and fewer assumptions doing the heavy lifting."
However, analysts at The Motley Fool offered a different perspective. "Both of these stocks look highly expensive, but if I were buying one of them, it would be Tesla, simply because it already has some strong financials, and its business is in much stronger shape, making it a safer option," wrote David Jagielski. He added that SpaceX faces the challenge of funding highly ambitious growth plans that are likely to require significant capital.
For investors weighing the two, the choice ultimately hinges on whether they prefer a company with proven operational momentum and a wide moat (SpaceX) or one with a transformative but unproven AI-driven future (Tesla). As TheInvestFeed's IPO coverage notes, both stocks carry significant risk at current valuations.
This article is for informational purposes only and does not constitute financial advice.
