SpaceX is preparing for its initial public offering (IPO) on June 12. If SpaceX achieves or even exceeds its target valuation of $2 trillion, the positive impact of this success could drive up the share price of Musk’s other major company, Tesla (TSLA). The logic is simple: Musk has repeatedly demonstrated an ability to generate market enthusiasm and bullish momentum, which can easily spill over to his other companies.
However, while short-term excitement may indeed boost Tesla’s stock price, a closer look reveals that the SpaceX IPO resembles yet another narrative-driven trading story rather than a prudent reflection of sustainable business value.
Musk excels at creating highly contagious optimism around grand technological visions. His past launches of new products, software updates, and grand declarations about the future have historically triggered multiple rallies in Tesla’s stock. Yet such gains have often been followed by sharp corrections when the company failed to meet promised timelines or when investor expectations shifted. Volatility is a defining characteristic of Tesla’s stock, whose price movements are frequently based on market sentiment rather than operational performance.
Once listed, SpaceX is likely to exhibit a similar trading pattern. Its achievements in reusable rockets and the Starlink satellite internet, combined with ambitious goals at the intersection of AI and space exploration, form a highly compelling narrative. Since Musk leads both SpaceX and Tesla, positive developments at SpaceX naturally enhance Tesla’s image. At the same time, turbulence at either company could put pressure on the other’s stock price.
Over the past two years, Tesla’s operational performance has been mixed. Its core business of electric vehicles faces increasingly intense competition overseas, which has pressured its prices and led to fluctuating demand in major markets. After years of revenue growth, its top line has largely flattened over the past three years, with even sales declines occurring during this period. Profit margins that stood at double digits just a few years ago have now dropped to around 4%. Meanwhile, Tesla’s energy storage business has shown encouraging growth momentum, with increasing deployment volumes and steady profitability, providing meaningful support for sales diversification.
Despite these realities, Tesla’s valuation still reflects investors’ aggressively optimistic expectations about future breakthroughs in autonomous driving and humanoid robotics. The company’s $1.5 trillion market capitalization and three-digit P/E ratio imply it will achieve enormous success in AI fields that have not yet been validated at scale. Production timelines, the need for regulatory approval of advanced driver-assistance systems, and the massive capital required for all these new initiatives are all potential pressure points.
Chasing narrative-driven market momentum carries significant risks. The SpaceX IPO could bring a wave of market enthusiasm to Tesla. Musk’s dual leadership role, the so-called AI positives, and the sheer scale of this IPO together form a perfect recipe for bullish sentiment. However, Tesla’s current valuation already incorporates a considerable degree of optimism, and adding IPO-driven frenzy would only increase the likelihood that investors buy shares at emotionally driven highs, rather than at valuations supported by the company’s actual business progress. Both SpaceX and Tesla stand at the intersection of AI and infrastructure. Their genuine technological ambitions do hold long-term potential, but whether they can provide investors with a sustainable investment thesis ultimately depends on actual execution capability.
