Elon Musk loses $19 billion after Tesla shares plunge 14%. What’s spooking investors?

Tesla shares crashed more than 14% on Thursday, wiping off nearly $19 billion from the world’s richest man and the company’s CEO Elon Musk’s net worth after the electric vehicle major’s quarterly earnings failed to impress the Street.

Tesla shares plunged over 14.5% to close below $320 apiece on Thursday. This came after the company’s profit miss and cash burn spooked investors, despite higher oil prices due to the Middle East conflict increasing demand for electric vehicles, leading to the automaker reporting record vehicle deliveries.

Tesla Q2 earnings


Tesla’s Q2 earnings failed to meet profit estimates for the first time in more than two years, with the company reporting a negative free cash flow as the company accelerated its AI spending and robotics ambitions.

Tesla's profitability was hurt by higher operating expenses due to AI, lower average selling prices and weaker regulatory credit revenue despite a rise in vehicle deliveries, the company said on Wednesday.

Also Read | Tesla Selloff Explained: Profit Pressure, Rising AI Costs and What's Next

Tesla's massive capex plans

Musk-led automaker is planning to spend more than $25 billion this year, which is almost triple of what it spent last year, as the company is betting on its AI-powered self-driving technology, robotaxis and humanoid robots over its core revenue generator, the auto business.

Tesla’s capital expenditures more than doubled on a year-on-year (YoY) as well as sequential basis to $5.8 billion in the June quarter, pushing free cash flow to a negative $1.1 billion. The cash burn was significantly higher than analysts’ expectation of $3.3 billion.

"This is a massive capex year, but I am confident that all the things that we are investing in will yield incredible returns," Musk told analysts on a post-earnings conference call. Investors are now increasingly turning their attention to Musk’s push into self-driving technology and robotics, with the company expanding its unsupervised robotaxi services.

Elon Musk’s wealth erosion

The sharp crash in Tesla’s share price pulled down Elon Musk’s net worth to below $732 billion, according to a report by Forbes. Notably, he last month had briefly become the worst first-ever trillionaire following SpaceX’s much awaited market debut, before the stock rally fizzled out and wiped off a significant portion of his gains.

Tesla shares have crashed nearly 27% in six months. SpaceX after its bumper debut has more than halved from its lifetime high.

Also Read | Tesla shares crash 14%, Alphabet falls 6% as AI spending worries hit Wall Street

(With inputs from agencies)
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