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What happened: Tesla stock (TSLA) climbed more than 1% following SpaceX's (SPCX) historic public debut.

What's behind the move: Shares of the electric vehicle maker climbed into green territory after initially dropping after SpaceX's first trade, which made founder Elon Musk a trillionaire. SpaceX stock surged nearly 20% after opening at $150 per share. The company priced its IPO at $135.

Tesla, along with the rest of the "Magnificent Seven" group of megacap stocks, has underperformed in recent weeks, with more than $2 trillion in market cap wiped out this June as investors rotated out of tech and into more cyclical and defensive sectors.

Strategists also believe investors may have been selling ahead of the IPO to accumulate dry powder.

What else you need to know: Wall Street anticipates that Tesla and SpaceX will eventually merge, as Musk leads both companies, and they are both heavily involved in AI.

"You could see this company's not only market cap, but revenue growth really be exponential. I can't even quantify it at this point," said Nancy Tengler, CEO of Laffer Tengler Investments.

The public debut of Elon Musk's rocket and AI company is expected to make history.

While Tesla is profitable, SpaceX has been burning through cash as it expands with ambitions to place data centers in space and eventually colonize Mars. The company's satellite business, however, is profitable.

Tesla stock is down nearly 10% year to date.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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