Buy SpaceX, Sell Tesla: A Case For Switching Musk Stocks

SpaceX (SPCX) hits public markets today at a touted $1.75 trillion valuation, and for the first time, investors have to choose between two of Musk’s biggest bets – SpaceX and Tesla (TSLA) – rather than just one.

Both are narrative stocks. Both are overvalued on any trailing multiple you care to run. SpaceX is richer than Tesla in pure revenue multiple terms.

But overvalued doesn’t mean equally risky. SpaceX At 100x Revenue: A Warning From 2000

SpaceX has annuity-type businesses with genuine iron grips on their markets, throwing off real cash while the moonshots and big investments get the headlines.

Tesla, on the other hand, is seeing its grip on its core market loosening, not tightening. And the moonshots it’s betting on are contested terrain.

The Numbers, Side By Side 

Tesla’s full year 2025 revenue came in at $94.8 billion, down 3% year on year. Adjusted EBITDA was $14.6 billion at a 15.4% margin, down from 16.4% in 2024 and 17.2% in 2023. Automotive revenues fell 10% to $69.5 billion. The company’s first-ever annual revenue decline.

SpaceX reported $18.7 billion in 2025 revenue. Starlink alone delivered $11.4 billion of that at a 63% segment EBITDA margin, growing 86% year on year. The xAI segment ran a $6.4 billion operating loss, dragging the consolidated net loss to $4.9 billion. Strip out xAI, and the picture is dramatically cleaner. See how SpaceX’S financials compare with other publicly listed Space stocks such as Redwire (RDW) and Rocket Lab (RKLB)

Tesla trades at roughly 14x trailing sales. SpaceX enters at over 90x. Both are expensive – but you’re buying very different things.

Tesla’s Narrative Problem

Start with the core. The car business is structurally under pressure. BYD surpassed Tesla as the global EV leader in 2025 with 2.26 million units delivered. Automotive revenues fell 10% in 2025. Deliveries dropped 9%. Margins have compressed for three straight years. Auto has never truly been a reliably value-accretive industry over the long run, and Tesla is playing in it while simultaneously spending aggressively on a future that remains unproven.

So the bull case has shifted – from EV leader to physical AI company. It now rests on the Optimus robot and the robotaxi network. The problem is that none of these is a slam dunk.

On autonomous driving, Alphabet’s Waymo has more driverless taxis on the road right now, more miles driven, and cleaner regulatory relationships. Tesla’s potential edge is fleet scale and data volume, but that lead is not unassailable. There are real engineering problems too – dexterous manipulation and functioning in unstructured real-world environments – remain largely unsolved industry-wide.

SpaceX’s Proof Points

SpaceX’s story has receipts, and they’re compounding.

Starlink subscribers grew from 2.3 million in 2023 to 8.9 million by the end of 2025, hitting 10.3 million by March 2026 across 164 countries. SpaceX raised Starlink plan prices by up to $10 a month in May 2026, signaling a shift toward monetizing its installed base rather than buying subscribers. That is the behavior of a business that knows it has pricing power. Churn is also limited. Since 2023, no enterprise customer paying more than $750K a year has voluntarily cancelled. This is the sign of an annuity business throwing off real cash. The problem with Starlink’s next 10 million users

The launch business is its own kind of moat. Launches scaled from 98 in 2023 to 170 in 2025, while mass to orbit nearly doubled. Falcon is essentially a utility now. Competition is years behind. Blue Origin only reached orbit in 2025, still on partial reuse. SpaceX holds roughly 60% of the global launch market. Starship needs to commercialize, yes – but even without it, the launch franchise alone makes a pretty defensible case.

The xAI segment is the drag and the wildcard. It generated $3.2 billion in revenue in 2025 but lost $6.4 billion on operations. Painful. The data center capacity is already being monetized, though, leasing compute to the likes of Google and Anthropic at billions per month. Real contracts with real counterparties. And then there’s the longer-term call: orbital data centers, running compute in space where cooling is free and latency economics flip. Speculative, yes, but the underlying infrastructure to get there is already being built for other reasons. If any of this scales, xAI moves from liability to asset without much incremental capex.

The Call

SpaceX is expensive because it’s winning. Tesla is expensive because investors are hoping it will.

If you’re holding both and need to make a choice, the logic points one way. SpaceX has a cash-generating core, a launch monopoly that is widening, and optionality that is already showing tangible signs of value creation.

Tesla faces a more difficult challenge. Its core business is becoming more competitive, while much of its valuation rests on products and markets that are still proving themselves.

Investors often focus on upside. The better question is what remains if the future arrives more slowly than expected. If neither company’s moonshots fully materialize, SpaceX still owns dominant infrastructure assets with real pricing power and recurring cash flows. Tesla looks much closer to a conventional automaker.

SpaceX at $135 is not cheap. At 90x sales, it may not even be a good investment. But between the two Musk narratives, it is the one with more evidence, stronger moats, and fewer assumptions doing the heavy lifting.

As SpaceX’s IPO tempts investors into a $1.75 trillion bet on rockets, satellites, and unproven AI, balancing speculative positions against proven cash-generating platforms becomes critical. A disciplined portfolio approach helps you stay invested by limiting the impact of market shocks. While consistently beating the market is a challenge, the Trefis High Quality (HQ) Portfolio is designed to make it a more achievable goal. The HQ strategy has consistently outperformed its market benchmark since inception, delivering cumulative returns of over 105 percent.