SpaceX’s planned June IPO could be a real test for the Tesla (NASDAQ: TSLA) share price. If Elon Musk’s rocket company comes to market at the planned valuation of $1.75trn, it would be the biggest IPO in history.
Oppenheimer’s Colin Rusch has warned that some investors may prioritise SpaceX shares over Tesla, which could distract from the stock. The shares are already down 28% from recent highs, so timing matters.
Yet the falling share price doesn’t seem to reflect performance. In Q1 2026, it delivered 358,023 vehicles globally and produced 408,386. Meanwhile, its US business sold 117,300 vehicles and took 54.2% of the American EV market, according to the latest reports.
Musk even mocked rival carmakers by asking, “what happened to all the Tesla killers?” after it outsold every other EV maker combined in the US market.
With so much conflicting data, what’s actually going on?
A sceptical market
Strong sales or not, the share price hasn’t had a great run lately. Tesla’s the worst-performing stock in the Magnificent Seven so far this year, which suggests investors aren’t convinced despite its market dominance.
Yet even with the fall, the stock still trades on a very rich valuation, with a price that’s hundreds of times higher than earnings. That leaves little room for disappointment if deliveries, margins, or investor sentiment soften.
Again, very conflicting data. Essentially, it was once so popular that it remains overvalued even after a months-long sell off.
Recovery potential?
The latest annual figures show why Tesla remains a polarising stock. In FY2025, it reported operating cash flow of $14.7bn, free cash flow of $6.2bn, and cash and investments of $44.1bn. Figures that give it a strong balance sheet and plenty of flexibility.
It also pays no dividend and is unlikely to anytime soon. Musk prefers to reinvest earnings into growth rather than distribute them. Still, for long-term investors, the bull case remains in place — it has scale, brand power, and a growing energy business. Plus, lower rates could help both car demand and valuation multiples over time.
The bear case is just as clear: the auto market’s cyclical, competition’s fierce, and Tesla’s valuation already prices in a lot of success that has not yet fully arrived.
So is it worth considering?
With Tesla looking increasingly like a high-risk growth bet rather than a comfortable long-term holding, I’m wary of considering it now. If the SpaceX IPO hype pulls attention and money away, the shares could stay volatile or drift lower in the near term.
Better options on the US market right now may be more fairly valued firms with clearer earnings and dividends, especially for investors who want steadier returns rather than a story stock.
A few I like the look of recently include HR software firm PayChex, snack giant Mondelez, and utility giant Duke Energy. They’re all very different to Tesla: fairly valued, low-risk, and income-oriented. Just the kind of things I look for when markets get wobbly.
