Shares of Elon Musk-backed SpaceX and Tesla have been falling and may have considerably further to drop, according to an analysis. SpaceX, which went public in June, saw its valuation soar to as much as $2 trillion on less than $19 billion in 2025 revenue, but the stock is now declining amid expiring shareholder lock-ups and a lack of near-term profitability, with Morgan Stanley projecting the company will not become free cash flow positive until 2035. Tesla’s core electric vehicle business is struggling after auto sales fell in 2025, regulatory credit revenue cratered, and its robotaxi rollout remains limited to Texas and Florida while rival Waymo expands. The company also faces technical and supply chain hurdles with its Optimus robots and Terafab megafoundry, and its forward price-to-earnings ratio of more than 150 leaves the stock with significant potential downside.
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