Tesla shares fall after results. But this market speculation may keep the stock afloat for a while

Tesla shares were lower after its first-quarter earnings announcement on Wednesday on the company’s bigger-than-anticipated cap-ex expansion, but Wall Street is buzzing about speculation that could keep a bid under the stock for the near future. The chatter is about a potential merger with SpaceX, Elon Musk’s breakout rocket company that is set to go public later this year at a valuation approaching $2 trillion. “Our takeaway from this is that Musk is laser focused on the laundry list of TSLA’s projects combined with the upcoming SpaceX IPO,” Baird researchers wrote in their Wednesday recap of the report. “In the very short term, we think the stock is likely linked to SpaceX IPO and potential merger rumors.” Analysts kept their remarks on the implications of the IPO pretty general, staying focused on Tesla’s multiple projects and rollouts, but they cautioned it could be unwise to bet against the stock with this potential. “In the short-term, we believe the pending SpaceX IPO (Private) will dominate debate on Tesla for both direct and indirect impacts that range from how many CyberTrucks could SpaceX take to the potential of a Tesla SpaceX merger,” analysts for Roth wrote Thursday. Wall Street has been buzzing about the merger speculation for a while, saying that traditional valuation metrics for so wide-ranging a company as Tesla were all but useless. “The logic of merging Tesla and SpaceX will keep center stage,” Jeffries analysts wrote in an Apirl 19 note to investors. “Traditional valuation metrics are of little use, with shares driven by sentiment and faith in operating roll-outs and sustained innovation. Tesla was last down about 3%. The shares have pulled back a bit in 2026, but have stabilized around recent levels. The stock is still up nearly 60% for the last 12 months even with not-so-great results coming out of the car unit. TSLA YTD mountain Tesla, YTD Jeffries had warned that “ambitious capex plans [were] set to create loss centers for a while” – a warning that bore fruit during the earnings call, as Tesla boosted cap-ex plan for the year to $25 billion from $20 billion. Some analysts are expecting cap-ex allocation to increase throughout the year, which could drag Tesla into negative free cash flow. SpaceX mention on call During the call, CEO Elon Musk talked about the mechanics of operations between his various companies, specifically regarding the buildout of his semiconductor fabrication project, Terafab. He made note of complications that are occurring because Tesla and SpaceX are separate companies, a comment which helped fuel the merger speculation further among analysts. “SpaceX is going to take care of the initial phase of the scaled up Terafab,” he said. “Any kind of intercompany thing has to be approved by both the SpaceX and Tesla board of directors. It’s got to go through a conflict resolution.” “It’s going to have a lot of, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there,” he said. “Musk gave comments describing the complexity of intercompany transactions which we believe supports the case for merging all entities over time,” Baird researchers wrote Wednesday. “Headlines/reports regarding the SpaceX IPO will likely drive TSLA shares in the near term, in our view.” Analyst sentiment on Tesla’s progress on various projects – including taxis, automated driving, energy storage, and robots – was mixed. Fully self-driving “take rates seem to be improving here, and cancellations are low,” Rob Wertheimer wrote for Melius on Thursday. Stifel researchers called Tesla’s generation and storage deployment in their fast-growing energy business “weak.” “Segment revenue of $2.41 billion trailed our $3.28 billion forecast, decreased 37.2% from 4Q25, and declined 11.8% from the year ago quarter. Tesla deployed 8.8-gigawatt hour of energy storage in the first quarter, marking a 38% sequential decline. “We still expect 2026 deployments to be higher than 2025,” CFO Vaibhav Taneja said Wednesday.