Why Tesla and SpaceX Workers Face a Tough Choice on Company Stock Investment

Billionaire Elon Musk has repeatedly encouraged his employees at Tesla and SpaceX to buy company shares during equity events, believing long-term ownership builds wealth. But is this actually sound financial advice, or a risky gamble? We asked three seasoned financial experts to weigh in on the pros and cons of investing heavily in your employer’s stock.

The Case for Employer Stock — With Limits

Filip Telibasa, a certified financial planner and owner at Benzina Wealth, sees merit in Musk’s suggestion, but only under specific circumstances. “If employees have already maxed out their 401(k)s and backdoor Roth IRAs, then investing in company stock makes sense,” he explained. “It lets them diversify after hitting their tax-advantaged limits.”

However, concentration risk is a real concern. Telibasa recommends capping employer stock at 10% of your total investment portfolio. This prevents you from betting too heavily on a single security, no matter how promising the company appears.

Michael Becker, a CFA and CFP partner at Toberman Becker Wealth, agrees that company stock plans can be powerful wealth builders. “Employers often offer discounted purchase plans or stock options, letting workers buy at below-market prices,” he noted. Companies with high employee ownership tend to perform better because workers have skin in the game.

But Becker echoes the diversification warning. “One business downturn could crush both your job and your retirement savings,” he cautioned. His advice: capture the employer match and discounts, then systematically rebalance into a broader portfolio.

The Darker Side: When Company Stock Becomes a Trap

Paulo Lopes, a financial planner at Woodmont Financial Partners, sounded an alarm bell: “Remember Enron?” He pointed to a chilling pattern where executives publicly pushed employees to buy company stock while quietly dumping their own shares. WorldCom and Lehman Brothers followed similar playbooks.

While success stories exist — Dell employees became “Dellionaires” in the late 1990s, and Nvidia, Tesla, and AMD workers saw massive gains — not all bets pay off. Intel, once a tech powerhouse, is now struggling to recover.

The unpredictable nature of concentrated positions makes it nearly impossible to know when you’re making a smart move or a reckless one. Lopes recommends keeping employer stock to 5% or less of your portfolio. If you have the financial cushion and can tolerate volatility, 10% might be acceptable.

The Real Risk: Your Job and Your Portfolio Are Already Tied Together

Consider how many people does Elon Musk employ across Tesla, SpaceX, and other ventures — they’re already exposed to company performance through their salaries and job security. Adding a massive stock position stacks the same risk twice. If the company struggles, you face both income loss and investment loss simultaneously.

Lopes’s core message is simple: “There’s no reason to bet everything on the company that already dictates your work schedule and paycheck.”

Bottom Line for Investors

Employer stock can be part of a wealth-building strategy, but not the foundation. The consensus among experts: participate in company plans to capture discounts and matching, but treat it as a satellite holding, not your core portfolio. Maintain broad diversification, cap your exposure at 5-10%, and never forget that your career and your investments shouldn’t dance to the same tune.