The past week has seen a dramatic upheaval in Elon Musk's financial empire. The two publicly traded companies he leads have both performed poorly. Tesla Motors (TSLA) shares tumbled nearly 20% over the week, closing at $313.03 per share, marking their worst single-week drop since 2022. Meanwhile, SpaceX closed at $115.07 per share, its lowest level since the company's IPO last month.
According to data from the Bloomberg Billionaires Index, Musk's personal wealth has evaporated by approximately $130 billion (about 880 billion yuan) in just five trading days. This comes just weeks after he became the first person in history to surpass a net worth of $1 trillion.
Musk himself joked on social media, calling himself a "(former) trillionaire."
Reasons Behind the Tesla Stock Collapse
The sharp decline in Tesla Motors (TSLA) stock was triggered by the company's second-quarter earnings report released on the evening of July 22, which fell short of expectations. The report showed that Tesla generated $28.24 billion in revenue for the second quarter, exceeding market forecasts and representing a 26% year-over-year increase. This was the first time in three years that revenue growth exceeded 20%. However, quarterly operating profit came in at just $398 million, far below the market's expectation of $1.39 billion. Adjusted earnings per share were $0.33, down 18% year-over-year and significantly missing estimates.
According to reports, Tesla's second-quarter profit unexpectedly declined, primarily due to the company offering discounts to boost electric vehicle sales. The company's adjusted net income for the three months ending in June was $1.2 billion, down 17% from the same period last year and below Wall Street's forecast of $1.9 billion.
The report notes that after the U.S. government significantly reduced the $7,500 electric vehicle tax credit and repealed regulations encouraging EV production, Tesla Motors (TSLA) has faced difficulties in the U.S. market. Revenue from selling regulatory credits to competitors, which helps them offset emissions, fell from $439 million a year ago to $146 million.
At the same time, as Tesla Motors (TSLA) pushes into the AI and robotics sectors, its capital expenditures have more than doubled compared to last year. This spending led to the company's first quarterly cash burn in two years, with free cash flow reaching negative $1.1 billion. Musk told investors that the company remains on track to invest more than $25 billion in full-year 2026, nearly three times the amount from the previous year.
Public information shows that Tesla Motors (TSLA) shares have fallen nearly 30% so far this year, making it the worst-performing stock among major tech companies.
SpaceX's Post-IPO Decline
Meanwhile, while SpaceX shares surged after their listing, they have been steadily declining over the past month. The stock has fallen in four of the last five weeks and is now down approximately 43% from its closing high.
Daniela Hathorn, Senior Market Analyst at Capital.com, stated that the decline in SpaceX shares is "the combined result of profit-taking, a reassessment of valuations, and the unwinding of previously extremely optimistic positioning."
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