3 Types Of Investors Who Should Avoid Spacex And Tesla St…

1. Novice investors

Even for those who know nothing about investing, both SpaceX and Tesla might look attractive choices on the surface. Both are growing their revenues thanks to technologies that increasingly interest the public, and Musk’s past successes add to their appeal.

However, most investors do not own individual stocks. Instead, they tend to own long-term passive mutual funds and exchange-traded funds held in their retirement accounts. That is a sensible strategy, particularly for investors who don’t have the time or willingness to dig into the details of individual businesses’ competitive advantages, risks, and financial metrics. Many of these funds may include Tesla and SpaceX among their numerous other holdings.

Moreover, if one wants to learn how to invest in stocks, most experts recommend starting with companies that have well-known brands, solid balance sheets, and long track records. SpaceX and Tesla are both well-known, but SpaceX doesn’t even have a full year under its belt as a public company, and Tesla only went public in 2010 — that’s not a terribly long track record either.

Moreover, objectively speaking, these companies’ financials may not be the easiest to understand. Blue chips such as Home Depot or Chevron, which have existed for decades and operate in more straightforward businesses, may make better sense as one’s first stock picks.

TSLA – Tesla

$405.84+$14.22 (+3.63%)

NASDAQ · As of 2:23 PM ET 10/27/26

Premium Feature

Moneyball Superscore65/100

Key data points

Market capMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.$1.55T

Day’s range$395.25 – $407.50

52wk range$297.38 – $498.83

Volume32.5M

Avg volume36.9M

Gross margin19.29%

2. Risk-averse investors

Another aspect of investing that both novices and veterans amust account for in their choices is their risk tolerance.

Risk-averse investors would rather accept less growth potential in exchange for a lower chance that they’ll actually lose money on a stock. As such, they are better advised to buy slower-growing stocks in stable businesses that are less ly to fall in the long run. Even in bear markets, they tend to decline less than cutting-edge tech companies that get valued heavily on the future potential, and those slow-and-steady stocks often pay dividends.

In contrast, risk-tolerant investors are willing to accept a markedly higher possibility of stock price declines if it increases the lihood of rapid growth. Almost by definition, this requires them to be comfortable holding on through significant short-term ups and downs.  Not surprisingly, SpaceX and Tesla typically attract this type of investor despite being among the largest companies trading on the market.

Additionally, both are bets on the artificial intelligence megatrend. Assuming their AI technology thrives in niche markets, either of their stocks or the combined entity could earn considerable returns. However, failures in this area could mean investor losses. Moreover, since both trade at extremely high and speculative valuations, investors today face a greater risk of overpaying for these stocks.

Not all investors will feel comfortable with these risks. Those who don’t should probably not own these companies directly.

SPCX – Space Exploration Technologies

$149.54+$2.64 (+1.80%)

NASDAQ · As of 2:25 PM ET 10/27/26

Key data points

Market capMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.$1.97T

Day’s range$146.61 – $151.36

52wk range$104.83 – $225.64

Volume70.4M

Avg volume100.5M

3. Extreme growth investors

Given the other two reasons to not own these stocks, telling some growth investors not to buy SpaceX or Tesla does not seem to make sense. Tesla has historically experienced impressive periods of rapid growth in its publicly traded history, and both appear well-positioned to outperform the S&P 500.

Unfortunately, investors also must temper their expectations given the companies’ sizes. Growth investors have ly read stories about how those who invested a few thousand dollars in Home Depot or Amazon around their IPOs and held on now have positions worth millions.

The difference is that Home Depot or Amazon were small-cap companies at the time of their IPOs. At this point, Tesla and SpaceX are megacaps. Currently, Tesla’s market cap is about $1.5 trillion, while SpaceX’s is at $2 trillion — just about where it was early on the day of its June IPO.

This means that the combined company’s size would be at least $3.5 trillion. A 100-fold gain in such a stock would take it to $350 trillion. Considering that no company has yet reached $6 trillion, and the entire value of the U.S. stock market is around $75 trillion, even a 10-fold gain would seem hard to imagine.

Admittedly, AI development is driving rapid growth. If a combined SpaceX and Tesla succeeds, a $10 trillion or even $20 trillion market cap is possible in the foreseeable future. Still, a $20 trillion market cap would be close to a sixfold gain. That would be impressive, but it’s still well short of the 100-fold or more return potential that extreme growth investors might seek.

Investing in the combined SpaceX and Tesla

Although a combined SpaceX and Tesla holding could be desirable, that prospective stock would not be suitable for everyone. Both companies are ly to be among the top AI companies. This could mean they will outperform the market regardless of whether the merger happens.

Nonetheless, before buying such a stock, one has to know what kind of investor they are. If they are not knowledgeable, cannot tolerate significant risk, or have extreme growth expectations, they may not want to buy s of this prospective future company.

Read Next

Oct 27, 2026 •By Jack Caporal

AGI vs. AI: The Motley Fool’s AGI Disclosure Index Shows AGI Moving from CEO Talk into SEC Filings

Oct 27, 2026 •By Keithen Drury

Here Is What a $5,000 Investment in SpaceX Could Be Worth by 2028

Oct 27, 2026 •By Patrick Sanders

In a SpaceX-Tesla Merger, Tesla holders Might Be the Junior Partner

Oct 27, 2026 •By David Jagielski, CPA

Elon Musk Reveals the Real Reason He Hasn’t Confirmed a SpaceX-Tesla Merger Will Happen

Oct 27, 2026 •By Daniel Sparks

Elon Musk Predicts a Wave of Failures Among AI Cloud Companies. Is SpaceX Stock a Sell?

Oct 26, 2026 •By Jack Delaney

Think You Missed Out on Investing in SpaceX Stock? Think Again.

About the Author

Will Healy is a contributing Motley Fool stock market analyst covering technology and consumer goods industries. Before The Motley Fool, Will was a freelance writer covering stocks and personal finance for MSN Money, Yahoo! Finance, and Nasdaq. Earlier in his career, he was an expert in geographic information systems, applying spatial and IT skills to perform RF and demographic analysis in the telecom industry. He holds a bachelor’s degree in journalism from Texas A&M University and an MBA in finance and strategy from the University of Texas at Dallas.

TMFWillHealy

@HealyWriting

Stocks Mentioned

Motley Fool Stock Advisor’s Latest Pick

Get Access

—% Avg Return

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.