Tesla Drops 13.5% on Weak Q2 Earnings, Worst Day in Years
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- Tesla stock fell about 13.5% on Thursday, one of the biggest single-day losses in company history, leaving the company down roughly 27% year-to-date.
- Tesla posted Q2 earnings of 31 cents per share versus the 51 cents analysts expected, though it beat revenue predictions.
- Tesla spent $5.8bn in Q2, producing negative free cashflow of $1.1bn for the first time in more than two years.
- Musk fielded investor questions on the earnings call about the slow rollout of Robotaxi (limited US availability) and Optimus (not yet available to consumers), reiterating that Optimus will be Tesla's biggest product despite numerous hurdles.
- Alphabet fell 6.5% after reporting higher spending plans and its first-ever cash burn, dragging the broader market down with it.
- The Magnificent Seven collectively lost $767bn in market value on Thursday per Bloomberg, with the Nasdaq down more than 2% and the S&P 500 and Dow both falling more than 1%.
- Tesla's electric vehicle sales surged on the strength of European buyers and rising fuel costs, but that auto revenue is being overshadowed by the company's heavy AI and robotics investment.
Why it matters: Tesla burned $1.1bn in negative free cashflow last quarter as $5.8bn in AI and robotics spending outpaced earnings that came in at 31 cents per share versus 51 cents expected. Robotaxi is limited to select US cities and Optimus is unsold, leaving shareholders to reprice the gap between Musk's promised revolutions and the slow commercial rollout.
