Jefferies Warns Tesla May Trade Like SpaceX Proxy Stock

Key Moments

Jefferies Cuts Target and Flags Structural Risk

Investing.com – Jefferies reduced its price target on Tesla (NASDAQ: TSLA) to $375 and cautioned that a shifting market narrative around a potential Tesla-SpaceX merger is creating a new structural risk for the stock. According to the firm, growing investor belief that such a deal could be “next and soon” may effectively turn Tesla into a tracking vehicle for SpaceX (NASDAQ: SPCX).

The revised target implies about 6% downside risk from where Tesla currently trades, underscoring Jefferies’ view that the stock’s risk-reward profile has deteriorated.

SpaceX IPO Fallout and Tracker Stock Concerns

Jefferies examined how Tesla’s trading dynamics have evolved in the wake of the blockbuster SPCX IPO. The firm observed that Tesla shares did not experience meaningful selling pressure ahead of the SpaceX debut, but it warned that the market’s subsequent focus has shifted quickly toward the prospect of a future combination of the two companies.

The broker highlighted that “consensus that a merger will be next and soon may turn TSLA into a tracker as shareholders try to minimize stake dilution.” In Jefferies’ view, if investors increasingly treat Tesla as a conduit to SpaceX exposure, TSLA’s price formation could drift away from Tesla’s core business performance and become more closely tied to expectations around SpaceX.

Under that scenario, Tesla’s valuation could become progressively “untethered” from its own operating fundamentals as the stock trades more on sentiment and speculation about SpaceX’s trajectory rather than on Tesla-specific earnings and cash flow metrics.

Valuation Disconnected From Fundamentals

Jefferies summarized the current setup in stark terms: “Valuation & estimates remain disconnected,” and the firm does not see an easy or near-term resolution to that imbalance. The note suggests that neither a rapid catch-up in fundamentals nor a swift correction in valuation appears likely in the short run.

Cautious Outlook on Robotaxis and Humanoids

In its updated modeling, Jefferies is also more conservative than the broader analyst community on Tesla’s future growth engines. The firm is projecting results below consensus, based on the premise that key next-generation initiatives – particularly robotaxis and humanoid robots – will initially weigh on profitability.

As Jefferies put it, the firm is “assuming launching robotaxis & humanoids will initially create loss centres” – a markedly more cautious framing than the revenue and margin acceleration embedded in much of Wall Street’s bullish narrative.

Tesla’s elevated valuation relative to traditional automakers has frequently been rationalized by the potential for these businesses to eventually deliver substantial, high-margin revenue streams. Jefferies acknowledged that longer-term opportunity but argued that the market is overlooking the upfront investment cycle and the losses that are likely to emerge before those businesses can scale profitably.

Market Expectations vs. Investment Reality

Jefferies’ analysis underscores a growing gap between Tesla’s current share price and its near-term operational outlook. While many investors are focused on the ultimate payoff from advanced mobility and robotics initiatives, the firm believes the intermediate phase – marked by higher spending and initial losses – is underappreciated.

Combined with the perceived risk that TSLA could become a de facto tracking stock for SpaceX if merger speculation intensifies, Jefferies sees limited upside and a tangible risk of downside in Tesla shares at current levels.