Tesla, Inc. stock fell 4% on Wednesday to $381.59 as investor Gary Black said retail traders may be selling Tesla shares to fund purchases of SpaceX ahead of its initial public offering. Black, managing director of The Future Fund, attributed the decline partly to rotation into SpaceX, which has attracted over $250 billion in demand—more than four times the shares available. SpaceX is offering 555.6 million shares at $135 per share to raise $75 billion at a $1.8 trillion valuation, positioning the deal to become the largest IPO in history.
Gary Black Links Tesla Decline to SpaceX IPO Rotation
Gary Black said on X that many retail investors buying SpaceX shares this week will reduce their Tesla positions to fund the purchases. Black attributed Tesla's recent losses to broader weakness in long-duration tech stocks amid a higher-for-longer interest-rate environment, but identified SpaceX's IPO as an additional source of selling pressure. He said lead bankers Goldman Sachs and Morgan Stanley will engineer a day-one rally for SpaceX IPO investors, citing the banks' incentives given potential paydays from Anthropic and OpenAI in the months ahead. Tesla shares are on track to post a second consecutive week of losses.
Black Warns SpaceX Valuation at 300x 2025 EBITDA
Black said he views SpaceX as richly priced despite his optimism about a debut rally. Based on his estimates, SpaceX's IPO valuation equals 300 times its estimated 2025 earnings before interest, taxes, depreciation, and amortization, and 120 times its projected 2026 EBITDA of $15 billion. Given expected long-term EBITDA growth of 35% to 40%, Black said he would wait for the stock to come back to earth post-IPO before buying shares. SpaceX's offering is expected to eclipse Saudi Aramco's $29.4 billion debut in 2019.
Tesla Holds 19 Million SpaceX Shares as Merger Speculation Resurfaces
The SpaceX IPO has reignited discussions about a potential merger of the two companies. Tesla owns 19 million SpaceX shares, and the companies collaborate on AI initiatives, chip development, and computing infrastructure. SpaceX's latest S-1 filing mentions Tesla 87 times. Wolfe Research said the possibility of a Tesla-SpaceX merger has moved into the mainstream, with some investors citing the thesis as a reason for owning Tesla stock. Morningstar estimated Tesla shareholders could control as much as 66% of a combined entity.
ARK Invest Projects SpaceX Enterprise Value at $2.5 Trillion by 2030
ARK Invest expects SpaceX to reach an enterprise value of $2.5 trillion by 2030, nearly seven times its December 2024 funding-round valuation. In ARK's bull-case scenario, SpaceX could be worth $3.1 trillion by the end of the same period. The firm estimates SpaceX could generate $300 billion in annual revenue once Starlink's satellite constellation is fully deployed, capturing 15% of global communications spending. ARK said Mars will account for a growing portion of SpaceX's enterprise value over time, with Starlink's cash flows funding investments in Mars infrastructure and settlement.
FAQ
What caused Tesla stock to fall on Wednesday?
Tesla stock fell 4% to $381.59 on Wednesday as investor Gary Black said retail traders may be selling Tesla shares to fund purchases of SpaceX ahead of its initial public offering. SpaceX has attracted over $250 billion in demand, more than four times the shares available.
How much is SpaceX raising in its IPO?
SpaceX is offering 555.6 million shares at $135 per share to raise $75 billion at a $1.8 trillion valuation. The deal is expected to become the largest IPO in history, surpassing Saudi Aramco's $29.4 billion debut in 2019.
What is Gary Black's view on SpaceX's valuation?
Gary Black said he views SpaceX as richly priced, estimating the IPO valuation at 300 times its estimated 2025 EBITDA and 120 times its projected 2026 EBITDA of $15 billion. He advised investors to wait for shares to come back to earth post-IPO before buying.
