Tesla stocks plunged 14.5% to close at $319.69 on April 23 (local time) following the company's Q2 earnings announcement, erasing approximately $215 billion (about 320 trillion won) in market capitalization. The crash was triggered by Q2 adjusted net profit of $1.2 billion—a 17.0% year-over-year decline that fell significantly short of the market estimate of $1.9 billion. Despite record vehicle deliveries of 480,000 units, aggressive price discounting severely damaged profitability, while the earnings conference call intensified investor concerns over delays in the robotaxi rollout and lack of updates on the third-generation Optimus humanoid robot amid escalating capital expenditure commitments.
Morgan Stanley Lowers Tesla Target Price to $400
Morgan Stanley downgraded Tesla's target price from $417 to $400, expressing concern that future business initiatives remain unclear. The investment bank noted that while Optimus production launch is imminent, challenges including supply chain establishment, robotic hand dexterity implementation, and general-purpose task technology development could extend the timeline to full-scale mass production. The robotaxi service, originally targeted to operate in more than 25% of US regions by year-end, currently runs in only 7 cities. Morgan Stanley stated that Tesla's accelerating CapEx cycle represents essential investment to secure leadership in autonomous driving and robotics, but emphasized that the market now demands visible results from robotaxi and Optimus as this investment further deteriorates free cash flow.
Tesla CapEx Forecast Rises to $30 Billion by 2027
Tesla's capital expenditure is projected to exceed $25 billion this year, with spending expected to increase over the next 2-3 years across robotaxi, Optimus, semiconductors (Terafab), solar manufacturing, and AI computing resource expansion. Morgan Stanley raised its 2027 CapEx forecast by 50%—from $20 billion to approximately $30 billion. Consequently, the expected free cash flow burn for 2027 expanded from the previous $5 billion estimate to approximately $14 billion. The investment bank projects cash depletion will continue through the end of the 2020s.
Elon Musk Addresses SpaceX-Tesla Merger Speculation
During the conference call, CEO Elon Musk responded to a question about potential synergies from a SpaceX-Tesla merger by stating that the two companies collaborate closely across various fields with increasing overlap, and that Terafab will become a very large project. He added that he cannot discuss company mergers at this time, as such matters must go through appropriate procedures. Market analysts speculate that since semiconductors produced at Terafab will be essential components used by both Tesla and SpaceX, the companies may eventually pursue merger steps to facilitate smooth operations and secure core semiconductor supply chains for space, electric vehicle, and artificial intelligence businesses. According to foreign media reports, SpaceX disclosed in a public hearing notice filed with Grimes County, Texas, that it plans to invest a minimum of $55 billion in Terafab phase 1, with total investment potentially reaching $119 billion upon project completion.
FAQ
What caused Tesla stocks to crash 14.5% on April 23?
Tesla stocks fell 14.5% to $319.69 on April 23 (local time) after the company reported Q2 adjusted net profit of $1.2 billion, down 17.0% year-over-year and below the market estimate of $1.9 billion. Despite record deliveries of 480,000 vehicles, profitability was damaged by price discounting. The earnings call also raised concerns about robotaxi delays and lack of Optimus humanoid robot updates.
How much did Morgan Stanley raise Tesla's CapEx forecast for 2027?
Morgan Stanley increased its 2027 capital expenditure forecast for Tesla by 50%—from $20 billion to approximately $30 billion. The investment bank also raised its 2027 free cash flow burn estimate from $5 billion to approximately $14 billion, projecting cash depletion will continue through the end of the 2020s.
What did Elon Musk say about a potential SpaceX-Tesla merger?
During the earnings call, Elon Musk stated that SpaceX and Tesla collaborate closely with increasing overlap, and that Terafab will become a very large project. He noted he cannot discuss company mergers at this time, as such matters must go through appropriate procedures. SpaceX disclosed plans to invest a minimum of $55 billion in Terafab phase 1, with total investment potentially reaching $119 billion.
