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SpaceX (NASDAQ:SPCX) is preparing for one of the most closely watched stock market debuts in recent history, with its upcoming listing expected to provide a major test of the so-called “Elon premium” that has helped propel Tesla (NASDAQ:TSLA) to among the highest valuations in the U.S. market.

The company is seeking a valuation of approximately $1.77 trillion through its initial public offering, a figure that would immediately place it among the largest publicly traded companies in the United States and make it the seventh-largest by market capitalisation.

Supporters of Elon Musk argue that his track record of building disruptive businesses justifies the valuation, while critics contend that investors are being asked to pay a substantial premium for future growth that remains far from guaranteed.

“Its fundamentals are really tough. If there weren’t lofty expectations, there wouldn’t be an IPO here,” said Ed O’Gorman, CEO at River Wealth Advisors, which has invested in Tesla.

The market’s willingness to assign premium valuations to Musk-led companies has long been a defining feature of his business empire.

John Plassard, head of investment strategy at Swiss wealth manager Cité Gestion and a Tesla shareholder, said he would be willing to pay significantly more for a company run by Musk than for a comparable competitor.

According to Plassard, he would be comfortable paying 20% to 30% more for shares in a Musk-led business because of confidence in management execution and long-term value creation.

Even so, not all investors are convinced that SpaceX’s proposed valuation is justified. Some analysts argue that expectations for sustained rapid growth and flawless execution leave little room for disappointment.

SpaceX reported a net loss of $4.94 billion in 2025, yet the valuation sought in the IPO implies a multiple of 94.53 times annual sales, according to Reuters calculations.

For comparison, Tesla currently trades at approximately 16.73 times expected 2025 sales, based on LSEG data.

Some market participants view SpaceX and Tesla as complementary investments rather than competing opportunities.

“We see Tesla and SpaceX as complementary businesses. We feel confident that both of these companies can succeed,” said Tejas Dessai, director of research at Global X.

Adam Sarhan, chief executive of 50 Park Investments, echoed that view.

“If you’re betting on Elon the man, why not have both stocks in your portfolio?” said Adam Sarhan, chief executive of 50 Park Investments.

However, Sarhan noted that he would prefer to wait several months after the IPO before purchasing shares, allowing the stock price to settle following its debut.

One of the key areas of debate among analysts concerns SpaceX’s artificial intelligence business and the emerging technologies underpinning it.

Among the concepts attracting attention are orbital data centres, an area where commercial viability remains largely unproven.

“Space data centers that are very unproven. The physics is the biggest question mark of it all. How are you going to value something that you just simply cannot see or test or have any comparables to?” said Franco Granda, senior research analyst at PitchBook.

Meanwhile, Grok, the chatbot developed by xAI, continues to compete against more established AI offerings from OpenAI and Anthropic.

“We don’t see Grok as one of the leading AI labs today, and while we modeled a range of outcomes for this portion of the business, none of them meaningfully add to or subtract from our valuation of the AI business,” said Nicolas Owens, equity analyst at Morningstar.

Owens recently estimated SpaceX’s value at approximately $780 billion, less than half the valuation being targeted in the IPO.

Some investors have also raised the possibility of a future merger between Tesla and SpaceX, although many market participants acknowledge that such a transaction would be highly complex.

“At some point in the future, in the event of a successful IPO, Tesla will get absorbed into SpaceX,” said Michael Hewson, senior market analyst at iForex.

Justus Parmar, chief executive of Fortuna Investments, believes Tesla’s manufacturing expertise could eventually complement SpaceX’s long-term ambitions.

“When he’s developing the moon and beyond, you’re going to need real manufacturing capabilities,” he said.

Analysts note that concerns about Musk becoming overstretched appear less pronounced than in previous years. Having managed multiple companies simultaneously for a prolonged period, investors seem increasingly comfortable with his ability to oversee several ventures at once.

Since SpaceX confidentially filed for its IPO, Tesla shares have risen roughly 10%, contrasting with previous episodes when investor concerns over Musk’s divided attention weighed on the stock.

Tesla shares fell more than 30% during Musk’s acquisition of Twitter and declined nearly 16% around the SolarCity transaction in 2016.

Retail investors are also evaluating the opportunity. Alexandra Merz, who describes herself as an “all-in Tesla investor” since 2020, said purchasing SpaceX shares would require selling Tesla stock and potentially triggering a tax liability.

She said she preferred to remain invested in Tesla “with the conviction that there is a merger on the horizon,” she added.

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