Tesla Profits Plunge & SpaceX Stock Continues Fall

**John Johnston** (0:00)
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 did not go so well all around. 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.
So the Wall Street Journal has this headline here. We'll just have a look at that, and 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 fall in after-hours trading as earnings misestimate. And this is the stock price itself. So it went down 130 before earnings. Earnings were 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 was down 4.13% after hours at 374 I will remind you though, if we look at this market cap, it's still 1.17 trillion for this company. And so the PE ratio is 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.
So the high, the intraday high, the record high that it got to was 225.64.
So we're nearly down to half that now. And the market cap again still at 1.52 trillion. 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 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 in anything he says these days. So this is the Financial Times. Tesla profits plunge as discounts on EV models weigh on results. Capital expenditures more than doubled as company accelerates pivot to semiconductors, autonomous taxis and humanoid robots. Well, question marks over really all of those at this point.
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 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. 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%.
But importantly, operating margins. So Investors looking at that important overall operating margin 1.4%, which is really low in income from operations. Also down minus 57%, which is a big reason that 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 capital expenditure up. 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. We know that. We can see that even anecdotally. Petrol or gasoline prices are 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 musts, polarizing political activism and return to showrooms. Yes, so Elon's politics, which continues. I mean, really, he is divisive. Probably sell more cars, a lot more cars and products. 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, remain 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? We're gonna talk about this. They've got the car sales, Rover taxi, which is really not going well. I'm gonna 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 gonna 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.