The aerospace company founded by Elon Musk is preparing for what could be a historic stock market debut this week, with a massive $1.77 trillion price target that would place it among America’s seven most valuable publicly traded corporations.
This groundbreaking initial public offering will serve as a crucial test of what market watchers call the “Elon premium” – the extra value investors have been willing to pay for companies associated with Musk, which has helped drive Tesla to become one of the nation’s most highly valued firms and a favorite among individual investors.
While supporters of Musk argue his proven success record makes purchasing SpaceX stock at its IPO launch an obvious choice, several market experts and investment professionals warn that the costly valuation multiples could present excessive risk.
“Its fundamentals are really tough. If there weren’t lofty expectations, there wouldn’t be an IPO here,” said Ed O’Gorman, CEO at River Wealth Advisors, which has invested in Tesla.
The confidence that Musk can generate exceptional returns has historically justified elevated price tags throughout his corporate holdings.
John Plassard, head of investment strategy at Swiss-based wealth manager Cité Gestion, a Tesla shareholder, said he was comfortable paying 20%-30% more for shares in a well-run Musk company than for a comparable rival.
Yet the doubts surrounding SpaceX highlight that even Musk’s celebrity status might not overcome worries about its cost, as certain investors resist paying amounts that presume years of accelerated expansion and perfect implementation.
The rocket manufacturer reported a $4.94 billion net deficit in 2025, yet its desired market value represents 94.53 times revenue for that same timeframe, based on calculations by Reuters.
In contrast, Tesla currently trades at 16.73 times its 2025 revenue figures, according to LSEG data.
“We see Tesla and SpaceX as complementary businesses. We feel confident that both of these companies can succeed,” said Tejas Dessai, director of research at Global X.
Tesla’s achievement in transforming electric cars from specialized products into a mass-market sector has strengthened its reputation, establishing it as the globe’s most valuable automotive manufacturer.
“If you’re betting on Elon the man, why not have both stocks in your portfolio?” said Adam Sarhan, chief executive of 50 Park Investments.
Still, Sarhan indicated he wouldn’t purchase SpaceX shares right after their market launch, preferring to wait several months for pricing to stabilize before deciding.
Among the major uncertainties surrounding SpaceX involves its artificial intelligence division, which depends on unverified technologies including orbital data processing centers.
“Space data centers that are very unproven. The physics is the biggest question mark of it all. How are you going to value something that you just simply cannot see or test or have any comparables to?” said Franco Granda, senior research analyst at PitchBook.
Grok, the chatbot developed by xAI, also trails more established rivals from OpenAI and Anthropic.
“We don’t see Grok as one of the leading AI labs today, and while we modeled a range of outcomes for this portion of the business, none of them meaningfully add to or subtract from our valuation of the AI business,” said Nicolas Owens, equity analyst at Morningstar.
The previous week, Owens assigned SpaceX a market value of $780 billion, representing less than half its IPO goal.
Speculation about a potential combination of SpaceX and Tesla has emerged, although most market participants believe such a transaction would involve significant complications.
“At some point in the future, in the event of a successful IPO, Tesla will get absorbed into SpaceX,” said Michael Hewson, senior market analyst at iForex.
Justus Parmar, CEO of Fortuna Investments, which owns both Tesla and SpaceX, sees Tesla’s manufacturing prowess as the impetus for an eventual merger.
“When he’s developing the moon and beyond, you’re going to need real manufacturing capabilities,” he said.
However, investors appear less concerned this time about Musk becoming distracted, given his ongoing dedication to Tesla.
Having overseen both enterprises simultaneously for years, he’s unlikely to reduce his involvement with the car company simply because another of his businesses has entered public markets, according to analysts.
Following SpaceX’s confidential filing of IPO documents, Tesla stock has climbed 10%, contrasting with previous instances when concerns about Musk overextending himself hurt the shares.
The electric vehicle company’s stock dropped over 30% from when Twitter’s board accepted his acquisition offer until the transaction completed. Stock prices also fell nearly 16% during the SolarCity combination in 2016.
Tesla’s numerous individual investors are also evaluating the SpaceX public offering.
Alexandra Merz, a self-described “all-in Tesla investor” since March 2020, said she would need to sell Tesla shares to buy SpaceX stock, which would trigger taxes.
She would rather stay invested in Tesla “with the conviction that there is a merger on the horizon,” she added.
