Gate News message, April 23 — Tesla stock declined following the company’s earnings announcement on April 16, as investors reacted to a higher-than-expected capital expenditure plan. The company raised its full-year capex target to $25 billion from the previous $20 billion, reigniting concerns about weaker cash generation and potential negative free cash flow later this year.
Despite the pullback, market sentiment remained resilient due to growing speculation around a potential merger between Tesla and SpaceX. SpaceX is expected to go public later this year at a valuation close to $2 trillion. Wall Street analysts noted that the SpaceX IPO and merger rumors may now dominate Tesla trading dynamics more than quarterly earnings fundamentals.
During Tesla’s earnings call, CEO Elon Musk acknowledged the complexity of combining the two companies, stating that any deal would require approval from both boards and conflict resolution. Musk noted that such a merger would need to balance the interests of both Tesla and SpaceX shareholders. Analysts at Baird suggested that headlines around the SpaceX public listing could significantly drive Tesla shares in the near term.
On the operational front, Tesla’s energy storage segment showed weakness. The company deployed 8.8 gigawatt-hours of storage in the first quarter, a 38% sequential decline from Q4 2025. Energy storage revenue came in at $2.41 billion, below analyst expectations of $3.28 billion and down 37.2% from the previous quarter and 11.8% year-over-year. Despite concerns, the broader market backdrop remained supportive, with nearly 80% of S&P 500 companies beating earnings estimates and AI-related trades rebounding.
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