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The upcoming SpaceX IPO is generating unprecedented attention among retail traders. Any stock with “space” in its name or having anything to do with space seems to be going up. While long-term prospects of the company can be debated, it seems the only way SpaceX stock is going to go is up as soon as it opens for trading. Traders are freeing up cash to benefit from the IPO, and those already invested in Elon Musk through Tesla (TSLA) may consider selling their stock to benefit from the IPO. Here are three reasons why it makes sense to do so right now.
Reason No. 1: Tesla’s Core Business Is Shrinking, Valuation Makes No Sense
Tesla’s trailing 12-month revenue has stagnated for about three years now. Automotive revenue is down from $77 billion in 2024 to $69.5 billion in 2025. The company built 50,000 more cars in Q1 than it sold, which means people aren’t as excited about Tesla cars right now as they were before. Once the company lowers production to reflect this, it is going to cause another headwind as lower utilization rates reduce efficiency, thus increasing costs.
The reason Tesla’s stock hasn’t crashed to reflect the above reality is because of the potential of its future markets. Robotaxi and Optimus robots continue to drive the company’s bull thesis, but they aren’t here yet, at least not at scale. The stock is already pricing in a perfect execution, which means if you sell now, you’re likely going to get various opportunities to buy your stake back.
Reason No. 2: SpaceX Owns the Launch Market
Even if one leaves aside the massive total addressable market (TAM) that SpaceX unlocks, looking at the launch market alone makes the stock an attractive buy. The company’s reusable first-stage boosters have totally changed the equation when it comes to cost advantage. No competitors come even close, and are unlikely to do so in the near future, giving SpaceX a near monopoly in sending payloads to space. This advantage will compound over time. If no other company can match the cost per kilogram of material sent into orbit, it means customer could flock to SpaceX for launch, locking them into the company’s ecosystem.
Tesla, on the other hand, faces intense competition in the EV arena. The technology gap is closing fast, and there are now too many players for Tesla to compete with. SpaceX today is where Tesla was a decade ago. It makes perfect sense to buy it with Tesla stock, even though there are the usual risks that come with an IPO.
Reason No 3: SpaceX Is an Infrastructure Bet on the Future Space Economy
Through the above launch market dominance, SpaceX is the entry gate for almost all the startups vying for a piece of the space pie. Irrespective of which companies get to benefit from being the first to ply their trade in space, SpaceX provides the infrastructure that will be used to do so. Once Starship becomes operational, the company’s cost advantage will be multiplied by another order of magnitude, comfortably keeping competition at bay. So when companies start building data centers in space, which interestingly SpaceX itself is also planning to do, it could be SpaceX that helps companies build that infrastructure. The same infrastructure could also be used by governments and militaries that are already customers of the company. This is a kind of moat that is hard to beat.
About Tesla Stock
Tesla is a developer, manufacturer, designer, lessor, and seller of electric vehicles and energy generation and storage systems. The company operates across China, the United States, and international markets. It operates through the Automotive and Energy Generation and Storage segments. Its automotive business includes electric vehicles, insurance, leasing and financing services, warranties, the Tesla Supercharger network, repairs, and software upgrades.
Tesla stock has gone nowhere so far this year, with returns of -5.8%. This unimpressive performance isn’t changing anytime soon, and if anyone wants to trade the SpaceX stock while it is hot, freeing up the cash from Tesla shares is a good way to generate the funds for it.
Tesla Delivers Record Earnings
The company posted its Q1 fiscal 2026 results on April 22. The quarter recorded the highest first-quarter order backlog in more than two years. Giga Berlin also delivered a record output of over 61,000 units during the quarter. Margins were supported by one-time gains, including about $230 million from warranty adjustments and tariff-related relief. Energy gross margin exceeded 39.5%.
Tesla said it is entering a major investment phase that is expected to continue for the next few years. Due to increased spending on its semiconductor research facility in Austin and solar manufacturing equipment, the company expects negative free cash flow for the rest of the year. It also plans to expand its unsupervised FSD and Robotaxi operations to around a dozen states by the end of the year. However, it didn’t provide formal revenue or EPS guidance in the transcript.
What Are Analysts Saying About Tesla Stock?
With 41 Wall Street analysts currently covering the stock, it holds a consensus “Moderate Buy” rating. According to their estimates, Tesla has a mean price target of $401.77, which has already been reached. However, the highest price target of $600 still implies 42% upside from the current levels.
