SpaceX’s IPO could become a problem for EV maker Tesla (TSLA) because it gives investors another way to bet on Elon Musk without buying Tesla stock. For years, Tesla was the main public-market vehicle for investors who wanted exposure to Musk’s vision, even when the company’s fundamentals were not the main reason people owned the stock. But with SpaceX preparing to go public, analysts and investors now see a real risk that attention and capital could shift away from Tesla and toward Musk’s rocket and satellite company, according to Bloomberg.
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For instance, Joe Gilbert of Integrity Asset Management said that the SpaceX IPO “cannot be a positive for Tesla,” and argued that Musk’s focus may now be more heavily directed toward SpaceX. He also said that SpaceX feels like Musk’s “new baby” at Tesla’s expense. Separately, five-star BNP Paribas analyst James Picariello wrote that the IPO could hurt Tesla by “splitting” the pro-Musk retail investor base. This matters because retail investors own roughly 40% of Tesla shares, according to his estimates.
Will SpaceX Merge with Tesla?
Since Tesla and SpaceX may be competing for the same type of investor, talks of a merger between the two have surfaced. Nicholas Colas of DataTrek Research said that Tesla’s valuation has long been driven more by future hope than current reality, with the stock trading on Musk’s vision for autonomy, robotics, and EVs. SpaceX, however, may offer a cleaner version of that vision because it is already viewed as a clear leader with fewer obvious competitors. As a result, if the pitch is simply that Elon runs the company, it may make more sense to have everything under one roof. Nevertheless, no merger plans have been announced by the companies.
What Is the Prediction for TSLA Stock?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 12 Buys, 12 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $403.86 per share implies 2.5% downside risk.
