Tesla casts long shadow over SpaceX’s bumpy market debut
Tesla’s record-breaking returns for early investors have become something of a benchmark for SpaceX as Elon Musk’s latest company weathers a volatile start to life on the public markets.
SpaceX shares have fallen more than 20 per cent from their post-IPO high after briefly pushing the company above a $2 trillion (£1.5 trillion) valuation in the days following the largest stock market float in history.
The decline has wiped billions from the company’s market value and knocked Musk back below the trillionaire mark, but investors continue to draw comparisons with Tesla, whose early shareholders have enjoyed one of the strongest returns in modern stock market history.
New analysis by trading platform Taurex found a $1,000 investment in Tesla’s 2010 IPO would today be worth more than $24,000, making it the best-performing company in the study.
Adobe ranked second after turning an $11 IPO share into almost $245 over four decades, while Nvidia’s stock has surged from $12 at its 1999 listing to more than $200 today.
The figures come as investors assess whether SpaceX can follow a similar trajectory after its blockbuster debut.
“Tesla’s post-IPO journey shows that the best IPOs are not always the companies with the strongest early financials, but those that can turn a big vision into strong, scalable economics,” Lale Akoner, global market strategist at Etoro, told City AM.
“Early Tesla investors were rewarded because the company expanded its market, improved margins and kept executing despite scepticism.”
Akoner said SpaceX shared many of the same characteristics that attracted investors to Tesla: “SpaceX has similar ingredients, it has a strong founder-led story, large global markets, strong cost advantages in launch, Starlink’s growth, and a potentially huge AI opportunity.”
She urged investors not to take for granted that SpaceX will mirror Tesla’s success.
The former’s current market value already accounts for substantial future expansion, and its high valuation is significantly driven by enthusiasm surrounding Elon Musk.
IPO history offers reality check
The comparison comes as SpaceX’s early share price performance has broadly followed a familiar IPO pattern.
After surging in its first few trading sessions, the stock has retreated sharply as investors reassess its valuation and the wider outlook for high-growth tech firms.
The sell-off has coincided with broader weakness across tech stocks amid renewed concerns over AI spending and the prospect of higher US interest rates.
History suggests that would not be unusual, with research by finance professor Jay Ritte consistently finding that while IPOs often enjoy a strong first-day rally, many underperform the wider market during their first year of trading.
Among the largest US IPOs of the past two decades, companies like Uber, Coinbase, Rivian and Robinhood all suffered significant declines after listing before investors reassessed growth expectations.
Rachel Winter, partner at Killik & Co, said SpaceX’s recent volatility should not come as a surprise.
“SpaceX isn’t the first large IPO to face initial turbulence,” she explained, pointing to Meta, whose shares fell sharply after listing before staging one of the strongest recoveries in technology.
“But SpaceX faces a very real challenge; it’s difficult to identify exactly how much the brand is worth. Efforts to find clarity are being muddied by enormous projections for growth, the incoming wave of index fund investment and Musk’s unique ability to capture the minds of both retail and institutional investors.”
The company’s inclusion in major index funds has also widened its reach. Vanguard’s Total Stock Market ETF and BlackRock’s S&P Total US Stock Market ETF now hold SpaceX shares.
An ETF, or Exchange-Traded Fund, is essentially a basket of hundreds of different stocks bundled into a single entity that trades on the stock exchange like an individual stock.
By adding SpaceX to these huge baskets, these funds are giving millions of passive investors automatic exposure to the space firm, even if they have never bought its stock.
“Everyday investors may now get exposure to SpaceX through broad funds, even if they do not buy the shares directly,” Akoner said.
“That improves access, but it also spreads the risks of valuation, volatility, governance and execution. For a company with such high expectations already priced in, index inclusion can create steady demand, but investors will need to stomach more volatility in their portfolios even if they only own SpaceX indirectly through index funds.”