For a decade and a half, Tesla Inc. offered the only public market bet on Elon Musk. But since SpaceX began trading in June, the electric vehicle giant has had to share its special sauce as it tests investor sentiment. In the three months since Space Exploration Technologies Corp.'s initial public offering, Tesla shares dropped 8.9%, compared with a 2.7% gain in the S&P 500. SpaceX stock, meanwhile, trades 9.8% above its $135 IPO price from June 11.

Tesla's lackluster performance has also followed its latest earnings report and product launch, both of which left shareholders seeking more credible proof that its pivot toward physical AI products will be successful. "Investors have treated SpaceX as the cleaner growth story and Tesla as the riskier turnaround bet," said Lale Akoner, global market strategist at Etoro. In fact, market-watchers have worried about this since the first news that SpaceX would pursue a 2026 IPO. The concern was that having two Musk ventures in the public market would dilute Tesla's so-called "Musk premium," the value that investors attach solely to Musk's leadership. Though Tesla withstood the listing better than many feared, the company on its own has given traders little reason to pile in. Its July earnings report triggered a selloff of more than 20% across the subsequent five sessions over mounting capital spending concerns. The launch of its long-awaited self-driving Cybercab last week also underwhelmed investors and spurred a federal regulatory probe. Even a steep beat in second-quarter vehicle deliveries failed to buoy the struggling stock. Despite those woes, Tesla is the priciest member of the S&P 500, trading at 177 times forward earnings. By comparison, the Magnificent Seven has an average price-earnings ratio of just 23.

Technical indicators paint a grim picture too. Tesla remains in a downtrend dating back to December, and the shares trade below key moving averages. Additionally, Rich Ross, head of technical analysis at Evercore ISI, noted that the pre-earnings close of $374 on July 22 has served as a short-term resistance level for the stock. "You wouldn't call Tesla a stock in a strong position," Ross said. Still, SpaceX's superiority to Tesla is not a foregone conclusion. Both firms still must demonstrate that their promised products — Tesla's self-driving cars and Optimus robots or SpaceX's orbital data centers — can turn into tangible revenue. "SpaceX now has to prove a $100 billion run rate is real, and Tesla has to prove it is more than the Musk stock people held before SpaceX was available," said Dave Mazza, chief executive officer of Roundhill Financial, which maintains positions in both Tesla and SpaceX.