Retail investors are facing significant losses after a sharp decline in Tesla and SpaceX shares, following a strong rally earlier this year. The downturn has affected global investors, including those in India who purchased U.S. stocks through international platforms.
Tesla is currently trading near $393, roughly 21% below its 52-week high of $498.83. SpaceX has fallen about 30% from its post-listing intraday high of $225.64 to around $157–158. The company debuted on Nasdaq on June 12 after pricing its IPO at $135 and opening at $150.
The correction has also eroded Elon Musk’s paper wealth. His net worth briefly surged after the SpaceX listing but later dropped below the trillion-dollar mark as both stocks weakened. For retail investors, the focus has shifted from Musk’s fortune to their own exposure in these two volatile stocks.
Why Tesla and SpaceX Fell After Strong Performance
Tesla’s decline came despite the company reporting strong second-quarter delivery numbers. This indicates that investors are looking beyond vehicle sales and weighing future plans in autonomy, robotaxis, and AI-linked businesses. SpaceX faces a different challenge: its Starlink, rocket launch, and space infrastructure businesses have drawn interest, but a limited public float has amplified price swings.
The correction has already triggered selling by some investors. Tesla has appeared among the most sold stocks on Vested Finance, according to platform data. SpaceX also saw strong retail demand after its IPO, including from Indians investing under the Liberalised Remittance Scheme (LRS).
Viram Shah, founder and CEO of Vested Finance, explained that the selloff reflects both business expectations and broader market repricing. “One is the actual businesses, and the other is the way the market’s re-pricing a whole basket of AI-linked names right now,” he said.
AI-Linked Valuations Under Scrutiny
Shah noted that Tesla’s recent stock move shows the market is not solely focused on cars. “Tesla just posted its strongest Q2 deliveries in a while, and the stock still fell. That tells you the move isn’t really about cars,” he said. He added that investors are questioning how much of Tesla’s valuation should depend on autonomy and robotaxi plans, which may take time to prove.
SpaceX has faced pressure despite strong interest in its core business. “Starlink’s profitable and growing, the launch business is setting records; what’s moving the stock is a very thin float and a premium valuation, so any selling gets magnified,” Shah said.
The broader market mood has turned cautious toward AI-linked stocks. Investor Michael Burry, known for his bet before the 2008 housing crash, has disclosed bearish positions against Tesla and other AI-related names, adding concern that some technology shares may have outpaced earnings support.
Shah described the current fall as a mix of profit-booking and a market re-rating. “You had a near-vertical run in SpaceX right after listing and a strong 2025 in Tesla, so some of this is just gains being taken. But underneath it, the market’s asking a harder question about how it wants to price these AI and space bets, and that’s the re-rating part.”
Advice for Indian Retail Investors
For Indian investors, experts recommend reviewing portfolio allocation rather than reacting to price moves. Selling only during a fall can lock in losses, while buying more at a lower price can increase risk. High-growth stocks like Tesla and SpaceX can move sharply, with large portions of their valuations depending on future businesses.
Investors should check whether one or two U.S. stocks have become too large in their portfolio. A long-term investor may view short-term volatility differently from someone with a shorter time horizon. However, a large position can heighten risk even if the company’s business remains strong.
“A great company and a great entry price aren’t the same thing,” Shah said. “For Indian investors going global through the LRS route, the discipline’s the same as always: size it so a rough quarter is a nuance in the portfolio, not the whole story.”
Newly listed stocks can remain unstable for several quarters. SpaceX still has a limited public float, and future lock-up expiries may add more shares to the market, potentially affecting prices.
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