July has been a horrible month for the inventory costs of Elon Musk’s two publicly traded corporations: Tesla (Nasdaq: TSLA) and SpaceX (Nasdaq: SPCX).
As of the shut of markets yesterday, the 2 corporations have seen their inventory costs decline by roughly 24% and 31%, respectively, since June 30. Right here’s what you’ll want to know.
Tesla inventory obtained hammered yesterday
Let’s begin with Tesla, Inc. Whereas the electric vehicle firm has seen its inventory worth decline for many of July, the drop had been delicate, and just like what most main tech shares had seen throughout the month.
Nevertheless, then yesterday got here, and TSLA inventory crashed greater than 14.5% in a single buying and selling session, ending the day down $54.32 to $319.69.
So what the heck occurred? Briefly: Tesla’s earnings occurred.
Yesterday, the corporate revealed its financial results for the second quarter of fiscal 12 months 2026. For the quarter, Tesla reported income of $28.24 billion, representing roughly 26% development from the identical quarter a 12 months earlier.
That kind of development is nothing to sneeze at, and, as noted by CNBC, Tesla’s Q2 income got here in properly forward of the $25.71 billion LSEG analysts have been anticipating.
However income is just one slice of the pie. Sadly for Tesla, precise earnings have been a lot weaker than anticipated.
The LSEG consensus was that Tesla would report an adjusted earnings per share (EPS) for the quarter of 51 cents. As an alternative, the corporate really reported an adjusted EPS of 33 cents. For the quarter, its complete web revenue declined by about 5% versus the identical quarter a 12 months earlier to $1.11 billion.
This earnings decline was the results of quite a few components, together with discounted pricing on its automobiles in an effort to spice up gross sales and a decline in regulatory credit score income.
However this wasn’t the one factor that appeared to spook buyers.
Tesla additionally revealed that its capital expenditure (capex) for the quarter surged 142% to $5.79 billion, pushed partially by spending on AI infrastructure and robotics R&D.
For the quarter, this additionally led to a destructive free money circulate of $1.1 billion.
Tesla isn’t the one firm throwing piles of money at AI buildouts. Nevertheless, buyers have recently begun to express increasing concern over such spending and whether or not it would finally repay.
SpaceX’s inventory worth decline has been extra gradual
Now for SpaceX. Yesterday, the corporate’s inventory worth fared higher than Tesla’s. It closed out the buying and selling day up practically 2.6% to $118.24.
Nevertheless, that’s the place the excellent news ends for SpaceX’s inventory worth. Whereas Tesla’s inventory worth fall was sharp and dramatic yesterday, SpaceX’s fall has really been worse—it’s simply occurred extra progressively over a interval of weeks.
As of yesterday’s closing worth of $118.24, SpaceX is now properly beneath its all-time excessive of $225.64 on June 16 (about 44% decrease), properly beneath its opening public buying and selling session worth of $150 (down about 21%), and even properly beneath its IPO worth of $135 (down about 12.4%).
Since June 30, the inventory has fallen greater than 30%. The query is why?
The reply is extra sophisticated than it’s for Tesla, as there is no such thing as a one set of monetary outcomes that has spooked buyers. As an alternative, it’s quite a few components.
Maybe the obvious is that even earlier than SpaceX held its IPO, many analysts voiced issues that SpaceX was massively overvalued. And that’s earlier than the inventory surged from $150 per share to above $225 in only a matter of days after its IPO.
Its decline since that peak might be because of many components, together with profit-taking and a rising sense that the corporate’s fundamentals don’t justify such a excessive valuation.
July has additionally seen some setbacks for the corporate. On July 16, its Starship Flight 13 was aborted after engine failures, and on July 20, a Falcon 9 Starlink launch was aborted on the final second, too.
These (albeit short-term) failures are clearly going to guide some buyers to scrutinize the corporate and its inventory worth prospects extra carefully.
The place do TSLA and SPCX inventory go from right here?
The place both inventory goes from right here is not possible to foretell.
After yesterday’s huge selloff, TSLA shares are presently buying and selling up about 1% in premarket buying and selling this morning. SPCX shares are presently down about 1%.
Tesla buyers will in all probability have to attend three extra months to get a fuller monetary image of the corporate. Tesla ought to announce the outcomes of its present Q3 round late October.
As for SpaceX, the corporate is predicted to announce its first financials as a publicly traded entity on Tuesday, August 4. Traders shall be keenly scrutinizing these outcomes to find out whether or not the corporate’s inventory worth displays its underlying financials and future potential.
Simply two days later, on August 6, the primary tranche lockup of SpaceX shares additionally expires, which means that’s when workers and pre-IPO buyers can legally promote a few of their shares. Many speculate that this lockup expiration may result in a glut of SpaceX shares flooding the market, driving the corporate’s inventory worth down additional.
Whether or not that occurs stays to be seen.
