Tesla stock (TSLA) is on the decline on Wednesday as its sister company, SpaceX, is being hit with growing setbacks and debt. The latter Elon Musk-led company is spending big to fix several engineering problems surrounding its Starship rocket program. After a June explosion on one of SpaceX’s rockets, around 20% of the engineering group working on the company’s flagship Falcon 9 program were reassigned for six months to Starship, according to people familiar with the company’s planning.
This big spending worries some investors in the SpaceX program, and despite it not being a publicly-traded company, those worries are leaking into the other publicly-traded Elon Musk company: Tesla. At press time, TSLA shares are down 3% on Wednesday, and down 2.7% in the last month altogether. The decline is unfortunate, as Tesla is looking to expand its Robotaxi program to other US States, which raised investor sentiment.
Tesla Stock on the Decline: Could SpaceX Make Things Worse?
The last six months have been rough for Tesla’s TSLA stock, trading down 5.6% in that span. The Robotaxi launch in June and expansion in the last month have helped the company’s revenue and stock growth. While the streak ended late last week, TSLA also rode a six-day streak of gains on the market. As a result, the stock is targeting a breakout driven by anticipated earnings growth and robust demand.
Stock analysts are split on Tesla’s valuation; targets range from $276 to $410. The highest stock price target sits at $410 from Morgan Stanley. On the other hand, the lowest forecast comes in at $276 from KGI Securities. The current market price for Tesla (TSLA) stock is $340.84. However, most projections are that Tesla will continue to outperform expectations for the remainder of August.
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Much of Tesla’s stock future, and SpaceX’s success, will hinge on what happens next. The company is aiming to launch its tenth test flight of Starship as early as Aug. 24. SpaceX may be able to continue to absorb more testing failures, but the perception that the company is moving forward in Starship development will be key to its long-term investment success and fulfilling contractual agreements with NASA. Any more failures could further leak into TSLA shares as well, as investors tie the success of the two companies together.