Tesla's Stock Price Problem Refuses To Go Away

SpaceX’s IPO prospects are drawing attention while Tesla’s stock and business performance lag. SpaceX’s early losses are attributed to AI spending, and Musk’s control of voting rights allows him to pursue those ambitions. Musk also links Tesla’s future to AI and AI-related products, including Robotaxi and humanoid robots, with a long-term vision of billions of units. Meanwhile, investors focus on Tesla’s current EV business, where market share declines and sales flattening reduce EVs’ appeal. Tesla’s EV sales fell in the EU and were mostly flat in the US, while China’s crowded market includes lower-priced competitors and improved features. Tesla’s global unit sales were roughly flat, though first-quarter auto revenue rose year over year.

"SpaceX could debut with a $2 trillion market cap as it raises $80 billion. It will need the money. The SpaceX loss in the first quarter was $4.3 billion against $4.69 billion in revenue. The loss was because of Musk's AI ambitions. The AI division lost $2.5 billion. It hardly matters; Musk controls 85% of the SpaceX voting rights and can do as he pleases."

"Musk has also said the future of Tesla ( NASDAQ: TSLA | TSLA Price Prediction) lies in AI and AI-related products, including its Robotaxi and Optimus robots (Tesla Bot). Musk says there will be 10 billion humanoid robots worldwide by 2040. These will be priced at $20,000 to $25,000. If it works, Tesla will have a revenue bonanza."

"But, at least some portion of Wall St. is concentrated on Tesla's current business, which is mostly EVs. The drop in Tesla's market share in many parts of the world and the flattening of sales in key markets like the US have made EVs much less attractive as a source of income. Tesla was the clear market leader in China, the US, and Europe for a few years in a row. Last year, Tesla's EV sales in the EU dropped by double digits. In the US, most measured sales were flat."

"In China, the world's largest EV market by far, Tesla competes with dozens of companies. Some have received government financial assistance. Some have vehicles that are much less expensive than Tesla's. Many auto experts say that the overall features of some EVs are better than Tesla's. Tesla's stock is down 7% this year. The S&P 500 is up 8%. And America's worst-run car company, Ford ( NYSE: F), has a flat stock price."

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