Tesla sees a $200 billion wipeout as investors pan Musk's plan to spend 'as fast as we can'

By William Gavin

Tesla's stock heads for its worst drop in a year after the company's earnings call leaves Wall Street with more questions than answers

Tesla delivered one of its strongest quarters for electric-vehicle sales, but investors' attention is mostly on its artificial-intelligence and autonomy plans.

Tesla's earnings commentary wasn't enough to justify the company's big-spending ways, and its shares are sliding on Thursday.

"Commentary on key growth drivers, Optimus and Robotaxi, was muted given the magnitude of technology challenges even as [electric-vehicle] sales appear robust," Oppenheimer analyst Colin Rusch said in a note to clients.

The company said little about its Optimus humanoid robots beyond warning how difficult the five-year project has been and will continue to be. On a call with investors on Wednesday, CEO Elon Musk emphasized the lack of an existing supply chain for humanoids, as well as the complexity of designing a robotic hand that can mimic human hands.

The robot is meant to "soon" enter production, Musk said, although it will be limited to start. Despite Musk's confidence in Tesla's robot, management did not say when it plans to reveal the third version of Optimus, which was initially meant to be unveiled earlier this year.

More was said about the company's robotaxi network, which Tesla has been scaling for about 13 months now and which recently entered a few new markets. Tesla offers ride-hailing services in seven cities, all but one of which feature some unsupervised trips. The company is also working to ramp up production of its Cybercab vehicle.

Ashok Elluswamy, head of artificial intelligence at Tesla, predicted that the company could eventually launch operations in "entire states as a whole" rather than growing city by city. Both he and Musk also emphasized that the company is focused on safety, with Musk warning that any injuries could incur regulatory scrutiny.

Robotaxis are a key area of interest for Tesla investors, and the company offered up a number of updated statistics on Wednesday, including that it has logged more than 380,000 miles of unsupervised robotaxi trips. Since the start of 2026, Tesla has grown its number of unsupervised miles per week at double-digit rates, according to Elluswamy.

However, Gary Black, managing partner at the Future Fund and a former Tesla investor, called such metrics "largely irrelevant." He said that Tesla "seems unwilling or unable to reduce the uncertainty" around its scale-up, which is "clearly" hurting the stock.

Tesla shares were down more than 13% shortly after Thursday's open and heading for their worst single-day decline since June 5, 2025, according to Dow Jones Market Data. The company has lost roughly $195 billion in market capitalization so far on Thursday, or more than the current market cap of any other global automaker, according to Dow Jones Market Data.

That move is more volatile than usual. Over the last five years, the absolute average post-earnings move for Tesla's stock has been about 8%, according to Dow Jones Market Data. Tesla is on track for its worst post-earnings performance since Nov. 6, 2013, when Model S fires and supply constraints concerned investors, according to Dow Jones Market Data.

In a note to clients, Morningstar analyst Seth Goldstein attributed the decline to Tesla's planned capital expenditures and weaker-than-expected second-quarter earnings. Rusch, meanwhile, called the results "uninspiring" and cut his profit expectations, citing Tesla's "substantial" execution risks and need for capital.

More clarity on Tesla's plans is needed, according to Morgan Stanley's Andrew Percoco. The "open question" remains when Tesla will begin seeing returns on its investments.

"Absent consistent, transparent proof points, we'd expect the market's tolerance for incremental capex to narrow," the analyst added as he lowered his price target to $400 a share from $417. Tesla's stock currently trades near $323.

Tesla reiterated plans to book at least $25 billion in capex this year as it works on several initiatives. Most of that will be spent in the second half of 2026. For the second quarter, Tesla posted its first quarterly cash burn in years.

Additionally, Tesla said it expects capex to continue growing for the next few years. Percoco now expects Tesla to book nearly $30 billion of capex in 2027, up from his prior target of $20 billion, leading to a projected $14 billion in cash burn for that year. Tesla is expected to burn $9 billion in 2026, according to the FactSet consensus.

To help fund that, Tesla said it is securing debt facilities that could allow it to borrow up to $30 billion to speed up its plans. The company had $43.5 billion in cash, cash equivalents and short-term investments at the end of June.

"We should be spending on capex as fast as we can ... without it being too wasteful," Musk said on Wednesday. "It's OK to be a little less capital-efficient if we get things done sooner."

-William Gavin

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07-23-26 1125ET