- Investor Gary Black suggests retail traders are selling Tesla shares to fund purchases of the hotly anticipated SpaceX IPO.
- The SpaceX offering has reportedly attracted over $250 billion in demand, more than four times the shares available, aiming to become the largest IPO ever.
- Despite expected strong initial trading, Black calls SpaceX “richly priced” and advises waiting for shares to “come back to earth” post-debut.
Tesla shares fell for a second consecutive session this week as investor frenzy shifted toward SpaceX‘s monumental IPO, with prominent investor Gary Black speculating that retail traders are liquidating their TSLA positions to buy into Elon Musk‘s next market sensation. The IPO is poised to break records, seeking to raise $75 billion at a staggering $1.8 trillion valuation, eclipsing Saudi Aramco’s historic 2019 debut according to reports.
Black attributed part of Tesla‘s weakness to the “higher-for-longer” interest rate environment pressuring tech stocks. However, he believes a specific rotation is occurring, stating on X that many retail investors buying SpaceX will likely lighten their Tesla holdings to fund the new purchase he said. Consequently, Tesla stock dropped 4% to $381.59 on Wednesday, cementing its position as the second-worst performer among the “Magnificent Seven” this year.
Black expects lead bankers Goldman Sachs and Morgan Stanley to engineer a significant first-day pop for the IPO. Meanwhile, he cautions that the valuation appears extremely high, estimating it at 300x projected 2025 EBITDA. He advises investors to wait for a more attractive entry point after the initial trading frenzy subsides.
The IPO fervor has revived speculation about a potential merger between Tesla and SpaceX. Analysts note the companies’ deep existing collaborations and Tesla‘s ownership of 19 million SpaceX shares. In contrast, Ark Invest projects a bullish long-term future for SpaceX, envisioning a potential enterprise value of up to $3.1 trillion by 2030 funded by Starlink’s cash flows.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
