Tesla Profits Plunge & SpaceX Stock Continues Fall

[00:00:00]Tesla profits plunge as discounts on EV models weigh on results. Hi everyone, JJ here. Welcome back. Well, Tesla had earnings today and the earnings call with Elon Musk and it didn't not go so well all round and also SpaceX shares are continuing to fall after I think a one-day reprieve of going up a little bit, continuing the slide. So, Elon not having a great day today.

[00:00:28]So, the Wall Street Journal has this headline here. We'll just have a look at that. We'll have a look at the earnings and about what some people are saying about it as well. But, the Wall Street Journal says Tesla's 5.8 billion in spending turns cash flow negative despite revenue surge. So, selling more cars. So, that was a good sign, I suppose, but they had to discount, it seems, quite a lot. Shares fallen after-hours trading as earnings miss estimates. And this is the stock price itself. So, it went down 130 before earnings. Earnings were after straight after the bell after the stock market bell after it closed. By the end of people digesting the earnings a little bit and the earnings call, it was down 4.13% after-hours at 374. I will remind you though, if we look at this market cap, still 1.17 trillion for this company. And so, the PE ratio sitting at 342, around there. So, still a huge value on this company. And SpaceX shares down 6.7% on the day as well. So, that is a huge amount just even in one day. It's now 115 dollars. So, the high, the intraday high, the record high that it got to was 225.64.

[00:01:50]So, we're nearly down to half that now.

[00:01:53]And but the market cap again still at 1.52 trillion.

[00:01:58]Elon not having a good day on both of his companies there. See, there was a question on the earnings call about joining the two companies together. He kind of dodged it. And on the earnings call, he he did apologize for being sick at one point after stumbling and not seeming very confident, unusually not confident. I don't know if that was completely true or not. It's hard to believe him what it anything he says these days. So, this is the Financial Times. Tesla profits plunges discounts on EV models weigh on results. Capital expenditures more than doubled as company accelerates pivot to semiconductors, autonomous taxis, and humanoid robots with question marks over really all of those at this point.

[00:02:43]But, also this is from Electric. We'll just run through the headlines. I'm going to go back to that Financial Times article and we'll have a look at the actual financials just briefly. Some of the numbers that stand out there that caught caught my eye. But, Electric says Tesla releases Q2 2026 financial results. Record revenue, big profit miss. So, pretty much that's the headline all around. But, here are the numbers. I know they're pretty small on the screen to read. Total automotive revenues were definitely up. That was a bright sign. But, it seems like they really had to discount. Energy generation and storage revenues up a little bit. You know, not massive growth there really. And services and other revenue also up. So, revenue up. But, when we go down a bit, we see total gross profits up 23%.

[00:03:33]But, importantly, operating margin. So, investors looking at that important overall operating margin 1.4%, which is really low. And income from operations also down minus 57%, which is a big reason that, you know, the stock price fell. I think these important numbers and operating expenses up, so they're spending more, profits down, obviously. And so, free cash flow also down and a capital expenditure up.

[00:04:05]Now, the Financial Times has it here, "Tesla's profits dropped unexpectedly in the second quarter as Elon Musk group offered discounts to boost EV sales and revenue from sales of regulatory credits to rivals dried up. But at the same time, remember we had the oil crisis really driven by the Iran war, so it was expected that sales have been way up on electric vehicles.

[00:04:31]We know that, we can see that even anecdotally. Petrol or gasoline prices going way up, that's going to drive sales of electric vehicles, but it didn't seem to help that much because of other reasons, the regulatory credits in the US drying up. The surprise decline in profits came even as Tesla has benefited from a rebound in EV demand in Europe as customers facing higher fuel prices overlooked Musk's polarizing political activism and returned to showrooms." Yes, so Elon's politics, which continues, I mean, really, he's divisive, it'd really help him sell more cars, a lot more cars and products.

[00:05:09]People would be more open to it. I know a lot of people watching my pod, listening to my pod, would be more open to it if Elon wasn't so just politically divisive. I mean, that's putting it mildly, right? "Sales in the US, however, remained depressed as the Trump administration scrapped EV incentives, forcing it to sell its cars at lower prices." So, this is the reason they did sell more cars, as we saw, but not really helping that much. So, what have they got? You know, this We're going to talk about this. They've got the car sales, robotaxi, which is really not going well, I'm going to show you, and Optimus. I mean, they talked about Optimus on the call, but Elon really wasn't that positive about that. It doesn't seem like these things are going to be happening near term, really. The Texas-based group reported adjusted net income, which excludes stock-based compensation and the change in value of its cryptocurrency holdings, down 17% to 1.2 billion, far below a Wall Street consensus of 1.95.

[00:06:14]So, that was a big miss there. I mean, it is only one quarter. I prefer to look at things over a long term, but it really over a longer term now not going so well. Shares in Tesla fell more than 2%. We saw that, ended up more than that after Elon started talking. Actually, as soon as he started talking, it started to drop even more. The Trump administration's dismantling of US climate regulations incentivizing the production of electric vehicles deprived Tesla of a crucial source of income from selling credits to rivals to offset their emissions. And Elon not seeming to care about climate change or anything like that. He's taken sustainable off the company's mission. Amazing abundance, which has seemed laughable when they put that in the earnings slide deck. Amazing abundance, it just seems ridiculous. Revenue from regulatory credits dropped to 146 million from 439 million a year ago.

[00:07:12]All right, so that's the basics of what happened. Let's have a look at what some people are saying here. So, Fred Lambert from Electric points this out. A paper gain on Tesla's SpaceX stake markup of about 68% of its Q2 GAAP net income, 763 million of 1.1 billion. And we can see what's happening to the SpaceX stock price. He says, but that was marked to SpaceX's stock price on the 30th of June. SpaceX has since fallen about 27% closing at 115. So, most of that profit and quotes is already gone. He points out. And Thunderfoot here, our friend Thunderfoot says Tesla market cap versus profits. He's got this graph here. Tesla is not a car company, it's a meme stock.

[00:08:02]So, this shows the market cap in red going way up and quarterly net income in blue going way down. to Virgin. Of course, he points that stuff out in his videos too, as well as the SpaceX dodginess. And Spencer here says, "To put this number into perspective, Waymo is averaging about 570,000 driverless miles per day." So, we're on to robot taxi now, of course. And this is after Tesla posted zero notable incidents across 380,000 miles traveled by robot taxi. So, that's not 380,000 miles per day. That's total of 380,000 miles traveled by robot taxi. And Waymo doing so much more than that, really scaling. And they said this in the earnings call when when they said zero notable incidents, I mean, that's weird, too. I mean, notable by by their standards.

[00:08:57]I was looking at something. They've had quite a lot of incidents happening.

[00:09:01]There's no major injuries or anything like that. I think one person was hospitalized for a minor thing. So, Fred Lambert also says, "No joke, Tesla's head of autonomy said that robot taxi has been growing literally exponentially."

[00:09:17]He said that on the earnings call.

[00:09:18]Incredible. What on this chart points to robot taxi going exponential? Yes, and that's not an exponential chart. In fact, this seems to be leveling off, not going exponential.

[00:09:30]And Dirty Tesla says, "Optimus, you're our only hope." This is the stock chart, the taste of the stock chart going down and a picture of Optimus holding it up, trying to hold it up. So, really the three-legged stool, we could say we've got the cars, selling cars, yes, selling more cars, but profit going down from from their discounting.

[00:09:53]And then we've got robotaxi, which is really not looking good, not scaling, very few cars on the road, and Elon on the earnings call was pretty subdued about that. Like he was saying, we don't want any accidents. He wasn't saying these big things that he has been saying about scaling to half the US quickly.

[00:10:10]And so, Optimus, you know, where's this market value? This is over over a trillion dollars of market value. I mean, where is it if these things aren't scaling, aren't growing, and bringing in the profits? And we have Optimus, which doesn't look like it's going to be scaling anytime soon. Elon on the earnings call talked about how difficult it is. He went on and on about how difficult it is, how amazing human hands are, how difficult it is for robot hands. He was trying to be more optimistic, but not this massive big talking like he has in the past. I mean, he seems to pulling back from it. He didn't put out these massive targets for the for robotaxi or for Optimus really like he has in the past, just talking so big. He wasn't doing that.

[00:10:57]What do you think? We've got a Tesla and SpaceX. It was a bad day for Elon today, both stocks going down, and not looking good for in a number of different areas for Tesla. And he was subdued about it.

[00:11:08]He It's almost like he didn't care. Said he was sick, but he didn't wasn't as optimistic or as I said big talking as usual. Let me know what you think about this. And right now I'm going to put a related video on screen if you're watching on YouTube and a subscribe link. Now, the two other places to watch video, Facebook, you can do a search for the John Johnson Lounge on there, and of course, Spotify. Thanks for watching this one, and I'll see you in the next one.