Musk Rebuilds xAI Ties with Tesla Amid SpaceX IPO Plans
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 13 2026
0mins
Source: stocktwits
- Investment Shift: Tesla received U.S. government clearance to convert its $2 billion investment in xAI into a small stake in SpaceX, representing less than 1% ownership, highlighting Musk's financial maneuvering and integration across his ventures.
- Rebuilding Process: Musk stated that xAI is being rebuilt “from the foundations up,” paralleling Tesla's early struggles, indicating a deep reflection and strategic adjustment that could impact investor confidence in Tesla.
- IPO Expectations: As SpaceX prepares for a potential IPO, which could be one of the largest in history, Musk's business empire is undergoing a reshaping, further strengthening the financial ties between Tesla and SpaceX.
- Market Reaction: Tesla's stock declined over 3% on Thursday, snapping a three-day winning streak, reflecting cautious market sentiment towards Musk's diversified investment strategy, with the stock down 12% year-to-date.
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Analyst Views on TSLA
Wall Street analysts forecast TSLA stock price to rise
30 Analyst Rating
12 Buy
11 Hold
7 Sell
Hold
Current: 399.150
Low
25.28
Averages
401.93
High
600.00
Current: 399.150
Low
25.28
Averages
401.93
High
600.00
About TSLA
Tesla, Inc. designs, develops, manufactures, sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Its segments include automotive, and energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of high-performance fully electric vehicles, and sales of automotive regulatory credits. It also includes sales of used vehicles, non-warranty maintenance services and collisions, part sales, paid supercharging, insurance services revenue and retail merchandise sales. The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives. Its consumer vehicles include the Model 3, Y, S, X and Cybertruck. Its lithium-ion battery energy storage products include Powerwall and Megapack.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Starlink as Financial Engine: Starlink generated $11.4 billion in revenue last year with nearly 40% operating margins, serving as a robust financial backbone for SpaceX's growth, despite the overall business facing significant losses.
- Valuation Risks: Priced at approximately 117 times sales, SpaceX's stock reflects high expectations for future performance, making it a risky investment despite the company's impressive technological advancements and achievements.
- Strong Market Reaction: Following its opening, SpaceX's stock surged 25%, rising from the initial offering price of $135 to $170, indicating strong market interest in its future potential, although analysts advise caution given the current high valuation.
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- Valuation Challenges: Former Tesla board member Steve Westly stated that pricing SpaceX's IPO will be difficult due to its three disparate core businesses, particularly noting that the Starlink satellite internet service is the only profitable unit, necessitating at least two successful 'moonshots' to maintain its high valuation.
- Merger Possibility: Westly mentioned that a merger between SpaceX and Tesla is 'absolutely likely' in the future, highlighting that both companies already share numerous resources, although such a merger would face governance issues, yet the chances of success remain high.
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- Strong Stock Performance: SpaceX shares surged 11% on their debut, reaching $172.4 per share during trading, positioning the company among the top ten most valuable firms globally, reflecting strong investor confidence in its future growth potential.
- Record-Breaking IPO: SpaceX raised $75 billion through its IPO by issuing 555.55 million shares at $135 each, making it the largest IPO by a wide margin, surpassing Saudi Aramco's $29 billion in 2019, indicating robust market enthusiasm for the space economy.
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See More
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See More
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- Dramatic Price Fluctuations: On its first trading day, SpaceX's stock surged from an opening price of $150 to $168, achieving a market cap of $2 trillion and becoming the seventh-largest company globally, reflecting high investor expectations for its growth trajectory.
- Retail Investor Allocation: SpaceX initially allocated 30% of its IPO shares to retail investors, but this was reduced to around 20%, despite demand exceeding $100 billion, resulting in many retail investors receiving only a fraction of their requested shares, highlighting tight market supply and demand.
- Divergent Analyst Opinions: Oppenheimer rated SpaceX as Outperform with a price target of $190, while Morningstar set a much lower target of $63, illustrating significant divergence in market sentiment regarding its long-term performance.
See More
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- Historic IPO: SpaceX raised $75 billion in its IPO, shattering previous records and pushing the company's valuation above $2 trillion, marking Elon Musk as the first person in history to surpass a $1 trillion net worth.
- Starlink as Financial Engine: Starlink generated $11.4 billion in revenue last year with nearly 40% operating margins, serving as a robust financial backbone for SpaceX's growth, despite the overall business facing significant losses.
- Valuation Risks: Priced at approximately 117 times sales, SpaceX's stock reflects high expectations for future performance, making it a risky investment despite the company's impressive technological advancements and achievements.
- Strong Market Reaction: Following its opening, SpaceX's stock surged 25%, rising from the initial offering price of $135 to $170, indicating strong market interest in its future potential, although analysts advise caution given the current high valuation.
See More
SpaceX Aims for Record IPO Valuation
- Fundraising Target: SpaceX aims to raise $75 billion through its IPO by selling 555.6 million shares at $135 each, achieving a valuation of $1.77 trillion, making it the seventh most valuable U.S. company, surpassing Tesla.
- Valuation Challenges: Former Tesla board member Steve Westly stated that pricing SpaceX's IPO will be difficult due to its three disparate core businesses, particularly noting that the Starlink satellite internet service is the only profitable unit, necessitating at least two successful 'moonshots' to maintain its high valuation.
- Merger Possibility: Westly mentioned that a merger between SpaceX and Tesla is 'absolutely likely' in the future, highlighting that both companies already share numerous resources, although such a merger would face governance issues, yet the chances of success remain high.
- Market Reaction: SpaceX's IPO is set to become the largest in history, with the market eagerly anticipating its future developments, especially under Musk's diversified business strategy, which may further expand its range of operations.
See More
Elon Musk Becomes First Trillionaire
- Historic IPO: SpaceX successfully went public today, raising $75 billion, surpassing previous records, with a valuation exceeding $2 trillion, marking a significant leap in Musk's wealth.
- Wealth Surge: Musk's net worth skyrocketed from approximately $813 billion to over $1 trillion, making him the first trillionaire in history, showcasing his immense influence in the tech sector.
- Business Structure Analysis: SpaceX's revenue is primarily driven by Starlink, which generated $11.4 billion last year, accounting for 61% of total revenue, while the launch and AI segments face profitability challenges, highlighting the risks of business diversification.
- Investment Risk Advisory: SpaceX shares are currently trading near $170, with a price-to-sales ratio of nearly 120 times; although Starlink is profitable, the overall business relies on its cash flow to support other loss-making divisions, necessitating careful risk assessment by investors.
See More
Elon Musk Becomes World's First Trillionaire After SpaceX IPO
- First Trillionaire: Following SpaceX's Nasdaq debut, Elon Musk became the world's first trillionaire with a market capitalization of $2.12 trillion, highlighting his significant influence and the market's recognition in the aerospace sector.
- Strong Stock Performance: SpaceX shares surged 11% on their debut, reaching $172.4 per share during trading, positioning the company among the top ten most valuable firms globally, reflecting strong investor confidence in its future growth potential.
- Record-Breaking IPO: SpaceX raised $75 billion through its IPO by issuing 555.55 million shares at $135 each, making it the largest IPO by a wide margin, surpassing Saudi Aramco's $29 billion in 2019, indicating robust market enthusiasm for the space economy.
- Future Development Strategy: Musk stated that SpaceX has been cash-flow positive since 2015 and plans to launch one million satellites while establishing AI data centers in space, showcasing its ambition in technological innovation and market expansion.
See More
Analysis of SpaceX IPO First Day Performance
- First Day Trading Performance: SpaceX began trading at $150 per share on its IPO day, an 11% increase from its IPO price, and reached $166 during trading, reflecting a 23% premium, indicating strong investor enthusiasm.
- Long-term Performance Warning: Despite the strong first-day performance, an Edward Jones study found that the average return for 27 tech IPOs was -3% after three months and -14% after six months, suggesting that investors should be cautious about short-term price fluctuations.
- Lack of Profitability: SpaceX reported a staggering net loss of $4.3 billion in Q1 2026, generating only $4.7 billion in revenue, highlighting the significant losses and meager revenues that drive management's urgency to raise fresh capital through a public offering.
- Market Volatility Risks: Research indicates that Elon Musk's behavior increases the volatility of SpaceX's stock, which investors should consider, especially since the initial weeks after an IPO often represent a poor entry point for investment.
See More
SpaceX IPO Sets Record as Elon Musk Becomes First Trillionaire
- Record IPO Size: SpaceX's IPO raised $75 billion at an initial price of $135 per share, setting a new record for the largest IPO in history, indicating strong market confidence in its future growth potential.
- Dramatic Price Fluctuations: On its first trading day, SpaceX's stock surged from an opening price of $150 to $168, achieving a market cap of $2 trillion and becoming the seventh-largest company globally, reflecting high investor expectations for its growth trajectory.
- Retail Investor Allocation: SpaceX initially allocated 30% of its IPO shares to retail investors, but this was reduced to around 20%, despite demand exceeding $100 billion, resulting in many retail investors receiving only a fraction of their requested shares, highlighting tight market supply and demand.
- Divergent Analyst Opinions: Oppenheimer rated SpaceX as Outperform with a price target of $190, while Morningstar set a much lower target of $63, illustrating significant divergence in market sentiment regarding its long-term performance.
See More
