Tesla Stock Slips Overnight: Retail Turns Cautious On SpaceX Merger Hype As Analyst Questions ‘Absurd’ $2 Trillion Valuation

• Stratechery analyst Ben Thompson called SpaceX’s $28.5 trillion TAM projection “absurd,” questioning the company’s AI-heavy valuation assumptions and rising losses.
• Bears like Prof G Markets co-host Ed Elson called the IPO filing “a trainwreck,” while ARK Invest’s Daniel Maguire defended the long-term Starship and launch-cost thesis.
• SpaceX IPO excitement continues fueling rallies across space stocks like ASTS, RKLB and SIDU.

Shares of Tesla, Inc. (TSLA) stock slipped 2% in overnight trading heading into Thursday as investors weighed heavy SpaceX merger speculation against growing criticism of the company’s “crazy” valuation math and AI ambitions.

TSLA stock jumped 2% on Wednesday, with shares on pace to record their second straight week in the green and their best month since September.

SpaceX’s $28.5 Trillion AI Pitch Draws Fire

Much of the controversy centered around SpaceX’s newly disclosed estimate that its total addressable market could hit $28.5 trillion, including a staggering $26.5 trillion from AI infrastructure, enterprise AI applications, subscriptions and advertising.

Tech analyst Ben Thompson of Stratechery on Wednesday ridiculed the figures, calling the IPO filing “absurd” and mocking one of the filing’s “silly” charts. “In all seriousness, the numbers are obviously absurd, but then again, everything about this IPO is absurd,” Thompson said.

The analyst said the valuation appeared disconnected from SpaceX’s current financials, noting that the company generated $18.67 billion in revenue last year, while posting nearly $4.9 billion in losses. Thompson also pointed to slowing revenue growth and escalating AI spending, partly from xAI integration costs.

Analyst Says Musk Is Selling A Dream, Not Just A Stock

Despite the skepticism, Thompson stopped short of dismissing Musk’s broader vision entirely. Instead, the analyst said that Musk’s greatest strength may lie in his ability to turn seemingly unrealistic narratives into commercially viable industries through investor belief and capital formation.

Thompson compared the phenomenon to earlier periods in Tesla’s history, when repeated stock offerings failed to weaken investor enthusiasm, as shareholders viewed Tesla as part of a broader tech movement rather than simply a car company. “It turned out, though, that TSLA was itself a meme,” Thompson said. 

The analyst also drew parallels to Apple’s famous “reality distortion field” by saying: “Musk offers a dream — Mars, fully autonomous vehicles, an addressable market of $28.5 trillion — and positions his companies and their stock as access to that dream,” Thompson said. 

“The question that matters, then, is not if the numbers make sense right now — they absolutely do not,” Thompson said. “What matters is if the dream is even possible.” The analyst added that space-based data centers and orbital computing infrastructure could eventually become commercially viable as launch costs decline.

Early SpaceX Investor Sees Tesla Inevitable SpaceX Merger

The merger talks came into the spotlight again on Wednesday after early SpaceX investor Peter Diamandis said that a merger between Tesla and SpaceX could eventually become strategically inevitable.

In a recent Bloomberg interview, Diamandis said that combining Tesla’s vehicle network, robotics capabilities and AI infrastructure with SpaceX’s launch systems, Starship program, and orbital communications network would create an unprecedented vertically integrated platform. “I put it not as a matter of if but only a matter of when those companies come together,” Diamandis said.

The investor also suggested a merger could strengthen Musk’s control structure by leveraging the super-voting rights he currently holds at SpaceX but lacks at Tesla.

Bears Call SpaceX IPO A ‘Trainwreck’

Stratechery was not the lone bear criticizing SpaceX’s IPO filing from last week. Ed Elson, co-host of the Prof G Markets podcast, called the prospectus on X “a trainwreck” based on the company’s financials, AI integration strategy and aggressive valuation assumptions.

Elson said that SpaceX’s slowing growth, heavy losses, and massive AI spending failed to justify the potentially largest IPO valuation in Wall Street history. However, bullish analysts argued that critics are underestimating the long-term impact of dramatically lower launch costs and reusable rocket systems.

ARK Invest analyst Daniel Maguire said on X that the “real story” behind the IPO is not near-term financials but the rapid decline in launch costs enabled by Falcon 9 and Starship. According to Maguire, Starship could eventually reduce launch costs to below $100 per kilogram, unlocking the economic viability of orbital data centers and expanding opportunities for future space infrastructure.

The analyst also noted that Falcon 9 reusability already helped SpaceX deploy more than 10,000 active Starlink satellites while generating billions in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) from the broadband business.

SpaceX IPO Hype Fuels Rally In Space Stocks

The highly anticipated blockbuster IPO filing has already spurred a sharp rally in space stocks such as AST SpaceMobile, Rocket Lab USA, and Sidus Space, among others, with investors viewing SpaceX as a long-term AI and orbital infrastructure powerhouse rather than just a rocket company. 

Bulls argue that if markets ultimately support the company’s targeted valuation, it could reshape how investors value the broader space sector, particularly companies related to satellite broadband, defense systems and future space-based computing infrastructure. 

Excitement intensified further after FTSE Russell floated new IPO inclusion rules that could allow giant newly listed companies like SpaceX to enter major indexes within days of listing, potentially opening the door to enormous passive-fund inflows.

How Do Retail Traders Feel About TSLA And SpaceX?

On Stocktwits, retail sentiment for TSLA was ‘bearish’ amid ‘normal’ message volume, while SpaceX chatter remained ‘bullish’ with ‘extremely high’ activity levels.

One user said, “Prediction: Tesla will never have a market cap higher than Nvidia. Once SpaceX goes public, its game over for Tesla.”

Another user said that if Tesla was ever folded into SpaceX after an IPO, YieldMax’s TSLA-linked ETFs like TSLY and CRSH could face “structural changes: since the funds rely on TSLA stock and listed TSLA options. They suggested that YieldMax could either convert the ETFs into SpaceX-based products, liquidate them, or temporarily suspend creations and redemptions depending on how regulators and options markets evolve. 

So far this year, TSLA stock has lagged its “Magnificent Seven” peers, making it the group’s third-worst performer, down 2%.    

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