Tesla and SpaceX shares experienced significant declines this week, marking a challenging period for Elon Musk. Tesla's stock plunged 18% during the week to close at $313.03 on Friday, representing its worst weekly slump since 2022 and bringing its year-to-date loss to 30%, making it the worst performer among major technology companies [1]. SpaceX shares also fell, dropping 7.2% over five days to close at $115.07 on Friday, their lowest level since the company's record IPO last month. The combined declines in both companies' stocks resulted in a $130 billion reduction in Musk's wealth, just weeks after he became the world's first trillionaire. Musk acknowledged the reversal with a post on X, writing, '(Former) trillionaire' [1].
Tesla's sharp decline was triggered by weaker-than-expected second-quarter earnings reported late Wednesday. The company turned cash flow negative due to increased spending on ambitious projects such as robotaxis, humanoid robots, and a giant chip fabrication facility. Analysts at Argus Research, who maintain a hold rating on Tesla, stated, 'We expect this to pressure free cash flow and delay earnings growth, without providing any near-term shareholder return,' and added, 'We believe it will be nearly impossible for Tesla to generate any consistency in profit growth in the near-term' [1].
SpaceX's stock has been on a downward trend since its IPO, falling for four of the past five weeks and now trading about 43% below its peak close on June 16. The latest 7.2% weekly drop comes ahead of the company's planned 13th test flight of its Starship rocket, scheduled for Friday evening. The upgraded Starship V3, which is approximately 400 feet tall and fully reusable, is considered vital for SpaceX's plans to expand its Starlink satellite network and for future missions, including returning U.S. astronauts to the Moon and eventually sending manned missions to Mars. The test flight was delayed from Thursday due to weather, following a previous scrub last week caused by a booster issue during engine ignition [1].
Elon Musk also made headlines this week with a contentious interview with The Economist, adding to the high-profile nature of the week's events [1].
CONCLUSION
Tesla and SpaceX stocks suffered steep declines, erasing $130 billion from Elon Musk's wealth amid disappointing Tesla earnings and anticipation of a crucial SpaceX Starship test flight. Analyst concerns about Tesla's spending and profitability, combined with SpaceX's post-IPO volatility, have heightened market uncertainty. The outcome of the upcoming Starship launch could be pivotal for SpaceX's near-term prospects.