Tesla Misses on Q2 Earnings, Stock Dives, Musk Loses $44B: Would a SpaceX Merger Make Sense?

Tesla shares fell 6.1% during after-hours trading on Wednesday after the EV maker's earnings per share in Q2 dropped to $0.33 from $0.51 a year earlier. As a result, Tesla chief Elon Musk's net worth fell $44.3 billion overnight to $750.2 billion, according to Forbes, attributable to his massive stakes in the companies.

Despite better-than-expected revenue in the company's auto business, Tesla's gross margin fell below consensus estimates as the average selling price per vehicle declined. Gross margin in Q2 fell to 16.8% from 17.2% a year earlier.

The EPS decline despite revenue increasing to $28.24 billion from $25.71 billion a year earlier could be attributed to skyrocketing costs as the EV maker aggressively piles money into AI and other R&D projects.

'Tesla comfortably beat on revenue, the market is punishing it in after-hours trading for the EPS miss and the negative free cash flow,' Nic Puckrin, cross-asset analyst and founder of Coin Bureau, told IBTimes UK.

The 47% jump in operating expenses dragged down the company's operating margin to 1.4% from 4.1% a year earlier. Free cash flow at Tesla also turned negative in Q2. The $1.1 billion deficit comes after Tesla generated $144 million in FCF a year earlier and $1.44 billion in Q1 2026.

Elsewhere, capex surged 142% to $5.79 billion in Q2 from $2.39 billion in the same quarter last year. Note that Tesla CFO Vaibhav Taneja told shareholders during the company's last earnings call in April that capex would top $25 billion in 2026.

Although Tesla is lagging far behind driverless ride-hailing companies, including Alphabet's Waymo, it is now 'ramping unsupervised' Robotaxi rides across US markets.

Tesla Misses Estimates Amid SpaceX Stock Crash

Musk had earlier indicated he expects SpaceX to ultimately merge with Tesla as the companies are heavily intertwined. The two firms, along with Intel, are partnering on the Terafab chip plant to develop a new set of AI chips for use in Tesla's Optimus robots, as well as in SpaceX's orbital data centres.

Tesla even invested $2 billion in xAI before SpaceX acquired the company. SpaceX also buys products from Tesla. For instance, it acquired $506 million worth of Tesla Megapack power cells in 2025.

Musk said on the latest earnings call that Tesla would soon disclose more details about the chip plant and had already ordered equipment for a 'development fab,' but declined to discuss other details for the 'high-risk, high-payoff bets' the company is making around AI microchips.

On whether Tesla would merge with SpaceX, Musk said 'there is more and more overlap, especially with Terafab. That's really going to be a gigantic project, but obviously, we can't talk about combining companies and that kind of thing on an earnings call.'

Furthermore, Musk noted that Grok is made by SpaceXAI, Cybercab will depend on SpaceX's Starlink for connectivity, and SpaceXAI is also creating an AI model intended to serve as a 'manager' of Optimus.

With SpaceX 40% below its peak just a month after its historic IPO, combined with Tesla's uncontrollable expenses amid a lack of similar sales momentum, the trends raise questions if a merger of the companies would really make sense.

A Long and Messy Path to a SpaceX-Tesla Merger

Some market experts see a solid business case for a merger, given that both companies are aggressively investing in AI and creating a massive automated ecosystem. True, the companies are likely to complement each other's ambitious efforts, with Musk seeking a single conglomerate instead of multiple companies, enabling him to run the complete business under one roof.

However, the companies presently have different long-term goals. Tesla plans to transition its business from primarily selling EVs and batteries to selling autonomous driving software and robots. While SpaceX could support Tesla with xAI and Starlink, the same outcomes could be achieved via joint ventures as well.

Puckrin believes that Tesla's merger with SpaceX appears to make sense on paper, but both businesses are part of Musk's empire, which means he would essentially be negotiating with himself. Musk would need two independent special committees and two fairness opinions if a merger is considered. Even SpaceX's defense contracts would require a national security review, making it a 'long and messy path to a merger,' the analysts noted.

In the near term, SpaceX plans to keep scaling its launch capability with its Starship rocket, as well as expand Starlink capacity and commercialise Grok AI and the Colossus data centre.

The biggest project could be the development of orbital AI computing clusters, which may or may not work out. Although Tesla is likely to be a key supplier for orbital data centers, it could be possible for SpaceX to achieve the same outcome with a joint venture or a more traditional OEM/supplier relationship.