Tesla’s stock price is down 17% this year—could its biggest competitor actually be SpaceX?

In recent months, Tesla’s stock performance in the capital markets has weakened significantly. Since the start of this year, it is down by about 17%, making it the worst among the seven major U.S. giants, reflecting investors’ wait-and-see attitude toward its operational transition period. However, Forbes points out that Tesla’s biggest problem may no longer come from Chinese competitors, nor from a slowdown in electric-vehicle demand, nor from the still-theoretical benefits brought by autonomous ride-hailing taxis and humanoid robots. The market’s focus is gradually shifting to SpaceX, another major player under Elon Musk, and its potential initial public offering (IPO) could produce a significant capital crowding-out effect on Tesla.

Tesla faces transition pains; down 17% this year

Tesla is in a transition period from selling electric vehicles to artificial intelligence and self-driving technology. Its first-quarter financial report showed revenue of $22.4 billion, up 16% year over year, and its earnings per share ( EPS) also delivered an impressive result of $0.41. But with a planned capital expenditure of as much as $25 billion in the future, the market is highly focused on the long-term sustainability of its cash flow. In addition, Tesla also recognized a $222 million impairment loss on its bitcoin assets. Tesla ( TSLA) stock is still down 17% this year, the worst among the seven major U.S. giants, reflecting investors’ wait-and-see attitude toward its operational transition period.

(Tesla records more than a $200 million bitcoin loss as capital expenditures surge—TSLA is still down 15% this year)

SpaceX operates more reliably! Expected to IPO at a valuation of $1.75 trillion

Compared with the transition challenges Tesla faces, SpaceX is expected to carry out an IPO at a valuation as high as $1.75 trillion. It will not only become one of the largest IPOs in history, but it will also bring long-awaited opportunities to Tesla investors who are tired of waiting for the CEO’s promises to be fulfilled—an opportunity to invest at a larger scale and in a more exciting “Musk myth.” Under the leadership of Gwynne Shotwell, who has served as president for the long term, SpaceX has demonstrated reliable, steady strength and is gradually becoming a brighter alternative. It has fewer direct competitors, and it does not have to face—every quarter, like Tesla does—the awkward questions about when it can truly challenge Waymo in autonomous driving technology or when it can actually deliver its robots.

SpaceX’s projected revenue this year is $22 billion, driven mainly by the steady growth of its Starlink network services. Market analysts point out that SpaceX has a clear first-mover advantage in the space economy and is operating in an emerging industry that is difficult to value, making it highly attractive to investors seeking high-growth momentum. In the future, institutional investors will very likely adjust their holdings of Tesla and instead allocate to SpaceX, so they can continue to participate in the premium associated with technology innovation. This expectation of rotation of capital across sectors is expected to create a capital crowding-out effect for Tesla.

Governance and merger risks in the Musk corporate ecosystem

As SpaceX’s path to listing comes closer, integration and corporate governance issues among Musk’s companies have become key focuses for institutional investors. At present, the business related to Musk’s artificial intelligence company, xAI, is tightly connected with SpaceX, which means the development of Tesla’s core autonomous driving and robotics technologies is highly related to SpaceX. Analytical institutions say that when the same person manages two publicly listed companies that have business dealings and overlapping resources, it can easily lead to potential conflicts of interest.

However, some believe that “Musk fans” should support both companies. And according to prior reports, Musk has sold part of his SpaceX shares to Tesla; if SpaceX surges, it could also bring gains to Tesla on paper. Moreover, under the “Musk ten-year compensation and voting rights plan,” Musk’s stock price target in the first phase is $612, and only then would he have the chance to receive a bonus.

(Following Musk to trade stocks? The compensation plan could lift Tesla’s stock price to $2,300)

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