SpaceX is preparing a potential initial public offering that could value the company at approximately US$1.7 billion, positioning it among the largest IPOs in history and creating a new focal point for investors linked to Elon Musk. The move could redirect capital flows from Tesla, as market participants reassess exposure to Musk-led ventures amid shifting performance dynamics and evolving growth narratives, according to analysts cited by Forbes.

The expected valuation reflects strong demand for SpaceX’s core businesses, including launch services and satellite internet operations under Starlink, which together generate an estimated US$22 billion in annual revenue. The IPO would provide public market access to a company that has so far remained privately held, offering investors a direct opportunity to participate in the expansion of the commercial space economy. This access is particularly relevant as institutional and retail investors seek new growth assets tied to long-term technological infrastructure.

Investor sentiment suggests SpaceX could be perceived as a more attractive investment than Tesla in the current environment. “Many Tesla investors see SpaceX as a better investment for several reasons,” said Ross Gerber, Tesla investor and CEO, Gerber Kawasaki. He added, “If I sell my Tesla shares, no one will argue they are overvalued. And if I want to benefit from the boom, I will buy SpaceX shares.” His comments reflect a broader view that capital rotation could occur if the IPO proceeds at the expected valuation, particularly among investors seeking exposure to high-growth sectors. 

Tesla’s recent financial results provide context for this potential shift. The company reported 1Q26 net income of US$477 million, representing a 16% increase year over year but a decline from the US$844 million recorded in the fourth quarter of 2025. Revenue reached US$22.4 billion, also up 16%, though below levels seen in the previous three quarters. The company’s energy storage segment, previously a growth driver, declined by 12% during the period. Tesla also reported no revenue contributions from its robotaxi program or its Optimus humanoid robot initiative, both of which remain under development and are central to its long-term strategy. 

Market participants are also evaluating Tesla’s valuation metrics relative to its current performance and future expectations. The company trades at approximately 200 times projected earnings and around 12 times expected annual revenue of roughly US$100 billion. These multiples reflect continued reliance on forward-looking assumptions tied to artificial intelligence, autonomous driving, and robotics. In comparison, SpaceX’s projected valuation implies a multiple of about 80 times its estimated revenue, driven largely by expectations for Starlink and potential new business lines such as orbital data infrastructure.

Brand perception and governance considerations are also influencing investor behavior. “What we see with Tesla is a brand where trust weighs more than strategy,” said Gonzalo Brujó, CEO, Interbrand. He added that “the real test is how long this dynamic can be sustained.” According to CNBC, Tesla’s brand value declined by 35% in 2025, reflecting challenges linked to leadership visibility and external positioning. While public scrutiny has moderated in recent months, analysts indicate it has not yet translated into a measurable recovery in brand strength. 

Despite these dynamics, not all analysts expect a significant shift in investor allocations. Seth Goldstein said, “I do not necessarily see people switching Tesla for SpaceX,” suggesting institutional investors are more likely to rebalance portfolios rather than fully exit positions. Governance risks remain a central theme in discussions surrounding the potential IPO.

Gerber also highlighted operational complexities tied to managing multiple public companies under shared leadership. “It is almost impossible to manage two public companies without constant conflict-of-interest lawsuits, especially when they sell products to each other,” he said. He added that integration across Musk’s companies raises structural questions that could require consolidation in the future.