TSLA Stock Rises Premarket Despite Model Y Recalls — Retail Expects Musk To Reward Tesla Holders In 'Overpriced' IPO

• The Model Y recalls are due to missing vehicle weight certification labels that regulators said could increase crash risk from overloading.
• Retail traders remained focused on SpaceX and Elon Musk’s upcoming IPO plans rather than the recall news.
• Traders speculated Tesla shareholders could eventually benefit from the SpaceX IPO, citing Musk’s past comments about rewarding TSLA holders.

Shares of Tesla, Inc. (TSLA) rose nearly 1% in premarket trading on Friday, even after the EV giant recalled over 14,000 Model Y SUVs in the U.S., as investors largely brushed aside the safety issue and instead focused on Elon Musk’s blockbuster SpaceX IPO and the possibility of future benefits for Tesla shareholders.

TSLA stock rose marginally on Friday to end at $417.85, but shares are poised to record their second straight weekly loss. 

Retail Shrugs Off Model Y Recalls

The National Highway Traffic Safety Administration (NHTSA) said on Friday that Tesla is recalling 14,575 Model Y vehicles due to missing certification labels showing vehicle weight specifications. According to NHTSA, the absence of the label could lead owners to unintentionally overload the vehicles, “increasing the risk of a crash.” 

Tesla said it will inspect affected vehicles and install the missing labels. Regulators added that there were no reported crashes, injuries, or fatalities linked to the issue.

The SpaceX IPO Bull Case

Despite the recall headlines, Tesla traders continued speculating on their role in SpaceX’s massive IPO plans after the space firm released its prospectus on Wednesday. SpaceX could become the largest IPO in Wall Street history, as the company reportedly targets a $2 trillion valuation in an $80 billion raise. 

Retail sentiment on Stocktwits for Tesla was 'neutral' amid 'normal' message volumes.

One trader pointed to Musk’s long-standing comments about rewarding Tesla shareholders if SpaceX eventually went public. “Elon said his advice is to Hodl TSLA shares,” the user said. “He has also commented in the past about rewarding Tesla holders if or when SpaceX goes public. SpaceX is finally going public in June. Trust the process. He won’t screw over TSLA shareholders. Tesla Shareholders have everything to gain on top of everything in pipeline for Tesla.”

Notably, the filing reinforced the growing overlap between Musk’s companies after the word “Tesla” appeared 87 times throughout the SpaceX S-1 filing, while "Musk" shows up 174 times. 

Another trader tied Tesla’s recent momentum directly to the SpaceX excitement, saying: “420.69 close. Elon wants it. Elon gets it… then rip up to the moon with SpaceX.”

Prediction markets have also become increasingly bullish on the debut. According to Polymarket, traders currently assign the highest odds to a SpaceX first-day valuation between $2 trillion and $2.5 trillion, while smaller but notable odds still exist for valuations above $3 trillion.

The SpaceX IPO Bear Case

Not all traders were bullish on the IPO structure itself. One user compared the situation to Tesla’s own historic inclusion into the S&P 500 in 2020, warning that passive investors may once again end up buying at elevated prices.

“Remember when $TSLA got added to the S&P 500?” the user said. “It ran from $83 to over $400 on pure hype. Every index fund in America was forced to buy at the top.” The same user added, “Wall Street isn't opening the door for the common man. It's handing him the bag.”

Another trader criticized both the IPO structure and the growing speculation around fast-tracked index inclusion rules. “This space ipo is sick stuff,” the user said. “Not only are they attempting to change seasoning and revenue requirements to enter S and P, for a company that lost four billion last year, but the S1 discloses over 170 million in related party cybertruck purchases!”

Meanwhile, Future Fund managing partner Gary Black said on X that he was “not that interested in $SPCX,” arguing that he did not know of any $2 trillion companies trading at “300x EBITDA.” “Given all the hype, likely to be way overpriced,” Black said, adding that he would be interested in the stock if it declines 50%. SpaceX’s IPO filing showed that the company generated $18.6 billion in revenue last year but posted a net loss of $4.9 billion.

Traders Unfazed By Starship Delays

Retail traders also appeared largely unfazed by SpaceX's delay of the latest launch attempt for its Starship V3 rocket. The company postponed Thursday’s launch after Musk said that a hydraulic pin issue had emerged on the launch tower. A new launch attempt is expected on Friday.

The Starship V3 rocket is key to SpaceX’s long-term ambitions around Starlink deployment, orbital computing infrastructure, lunar missions and future Mars transportation systems. The company has reportedly spent more than $15 billion on the Starship program.

Tesla Bulls Cheer China FSD Rollout

Part of the bullish sentiment around Tesla also came from renewed optimism around the company’s Full Self-Driving (FSD) expansion in China. Tesla recently confirmed that “FSD Supervised” is now available in China, alongside several other global markets, following Musk’s Beijing visit during U.S. President Donald Trump’s trip to China.

China recently legalized Level 3 autonomous driving systems, potentially creating a more favorable environment for Tesla’s advanced driver-assistance tech, even as regulators tighten oversight following several high-profile autonomous driving incidents across the industry.

So far this year, TSLA stock has lagged its “Magnificent Seven” peers, making it the group’s third-worst performer, down 9%.    

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