Elon Musk might have briefly been worth over a trillion dollars earlier this summer, but the recent crash in SpaceX shares has certainly dented his net worth. Another one of his companies, Tesla (NASDAQ:TSLA) is also notoriously volatile. After what has happened with SpaceX, could the Tesla share price come under pressure next?
A flip-flop opinion
I posed this question to ChatGPT, to see if it could give an objective view. It told me that I was correct in making the comparison, given that both companies are now being valued not just on today’s earnings, but on expectations of massive future AI-driven cash flows.
However, it then discussed how SpaceX’s recent weakness appears to have been driven by company-specific issues, such as the large upcoming insider lock-up expiry and the prospect of a significant increase in the number of shares available for selling. Tesla has been a public company for years and so doesn’t have this problem.
Therefore, even though it can’t rule out any imminent Tesla selloff, it doesn’t believe the move in SpaceX should be looked at as a similar case study.
Thinking deeper
I’m not entirely sure ChatGPT really had the vision for what I’m trying to get at. There are more similarities between the two <a href="https://bitcomme.com/from-employees-to-entrepreneurs-whats-driving-the-small-business-boom/” title=”From employees to entrepreneurs: What's driving the small business boom “>businesses than just having a big focus around AI products. For a start, the same AI capex spend concern is becoming apparent. Tesla is spending aggressively on AI infrastructure, autonomy, and Optimus. SpaceX is also investing heavily in AI, and its first earnings report out yesterday (5 August) showed AI capex exceeding expectations, which contributed to a post-earnings sell-off despite strong revenue growth.
Further, both companies have looming execution risk. What I mean by this is both are targeting large projects that they believe promise large commercial success in the coming years. If these don’t materialise, or investors just get a bit nervous, the stocks could struggle.
SpaceX has already fallen sharply, but Tesla is only down 25% this year, and is actually up 6% over the past 12 months. Therefore, Tesla could fall further in the coming months if concern rises further around AI capex spend and other factors.
A balanced view
I could be overly worried, and the connections between the two companies might be overstated. Tesla is a profitable company, with results out in July showing a record revenue haul of $28.24bn that beat expectations. It also posted record Q2 vehicle deliveries of over 480,000 units alongside production exceeding 450,000 vehicles. Clearly, the core operations are going well, which could be enough to avoid any imminent crash.
