SpaceX Rises as Tesla Falls
Apparently, not all of Elon Musk’s investors are worried that he’ll take his eye off the ball again. SpaceX, his rocket company, is considering a plan to raise funds and allow insider share sales, in a deal that would value the company at $400 billion, Bloomberg reported today. That figure would represent a 14% increase from SpaceX’s $350 billion valuation in December during a secondary offering of insider shares. It’s a good time to be a SpaceX investor!
The vibes among shareholders in Musk’s other big company, Tesla, are not nearly so good. The electric vehicle maker’s shares are down 26% over the same period that saw SpaceX’s valuation leap. As we noted in yesterday’s briefing, Tesla’s shareholders were particularly rattled on Monday when Musk said he planned to form his own political party, the America Party, to challenge the Democrat-Republican duopoly in American politics. That sent the company’s shares down nearly 7% as investors worried about politics and the prospect of a continued feud with President Donald Trump distracting Musk from the task at hand.
There are a number of reasons for the split in shareholder sentiment. SpaceX’s defensive moat around its main businesses—rocket launches and satellite internet service—is deep, and it could take rivals years to challenge its business with real competition. Musk also has a clear No. 2 at SpaceX, Gwynne Shotwell, who has shown she can run the company without him around. SpaceX is a private company, unlike Tesla, and many of its shareholders have deep, long-term connections to Musk and his companies. That may make its valuation less sensitive to the kinds of issues that would rattle retail investors in a public company.
Tesla, in contrast, is facing serious near-term competition in the EV market, particularly in China. Musk is betting the house on speculative new businesses—robotaxis and humanoid robots—with huge technical hurdles. And at times, he seems openly disdainful of the hassles of running Tesla as a public company, which probably doesn’t endear him to some shareholders. In the latest example, Musk on Tuesday told one prominent financial analyst, Daniel Ives, to “shut up” after Ives advised Tesla’s board of directors to make a series of Musk-related changes. For now, SpaceX investors don’t have to endure that kind of abuse, at least not in public.