Investor's Corner
Is Tesla’s ‘next era’ really without TSLA?
With just a few Tweets, Elon Musk announced that he intends to take Tesla private. The move came less than a week after the company’s Q2 earnings call, where Musk doubled-down on his promise to bring the company to profit in the second half of 2018. With Musk steadying his hand, it seemed he was pushing forward a “new era” for Tesla, one that aims for mild profitability, rapid growth, and continuing innovation. What’s changed?
“Grandiose promises were replaced with reachable projections, relentless growth was met with fiscal responsibility, and shaky improvisation gave way to clarity,” written in last week’s post-earnings column.
Over the last few years, Musk has often wondered aloud how Tesla would be different if it weren’t public. In Rolling Stone’s cover story of Musk last fall, he stated, “It actually makes us less efficient to be a public company.” Musk also told Bloomberg in a 2015 interview that there is “a lot of noise” when a company is public.
Would Tesla have existed without going public in 2010?
Short Answer. No.
Long Answer. Maybe.
When Tesla went public in June 2010, the company needed the cash. They were aiming to push the Model S into production and needed every dime to hire factory workers and renovate the factory. Going public for Tesla worked. The company was able to move the Model S into production and was delivering a few hundred vehicles per week before raising more money from the capital markets.
Since going public, Tesla has raised nearly $10B through debt and equity offerings (Not including the acquisition of SolarCity’s debt). It’s a sizable amount, but it pales in comparison to some private companies. For example, Uber, Lyft, and WeWork have all raised billions in the last few years. Uber has raised over $21B since its founding in 2009, Lyft has raised $4.9B since its start in 2012, and WeWork has raised $6.9B in the last 8 years.
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Before Tesla went public, Musk had to pour his fortune into the company just to convince others to invest. In the past eight years, the private markets have gained a tremendous appetite. No deal is too big. No ask is ridiculous.
Who wants in on “Private Tesla”?
A lot of names have been floating around in the past day. Who’s backing Elon’s private deal? The Saudi Wealth Fund? Tencent? Softbank? Google? All of the above?
In 2016, Softbank created a $93B Vision Fund. The fund has been making massive bets everywhere, Uber, Flipkart, WeWork, NVidia, and many more. Participating in “new Tesla” wouldn’t be out of character and it would be hard to see the company passing on one of the largest private deals in history.
The Saudi Wealth Fund and Tencent both recently made sizable equity positions in the company. Tesla going private could afford them a chance to grab a board seat and a larger share of the company. The Saudi Wealth Fund announced their sizable stake yesterday morning and Tencent announced theirs in March 2017.
Google? Did I just throw them out there? The company already owns a chunk of Musk’s SpaceX and in Ashlee Vance’s 2015 biography of Elon Musk, it was revealed that Google mulled acquiring the company for $6B in early 2013 (Tesla was worth $3-4B at the time). Google’s parent company has over $100B in cash on hand, so a sizable investment into Tesla is certainly doable.
Outside of those specific entities, its worth noting that Tesla could draw significant capital from Silicon Valley. While most private equity in the valley goes to companies far smaller than Tesla, it wouldn’t be shocking to see venture firms and fellow billionaires take a position in Tesla.
So what does “Private Tesla” really look like?
In Musk’s perfect “Private Tesla” scenario, he envisions all current investors to keeping their shares with the company. But how would that really work? Musk claims that it would be structured similarly to SpaceX, which allows employees and investors to buy or sell stock every 6 months (or other liquidation events, ie. investments). That structure gives Tesla much tighter control of the share price, preventing volatility.
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Highlighted in a report from The Information, current SpaceX shareholders receive a disclosure packet, along with updated financials, every 5-9 months. The process allows the company to set their own share price, after gauging outside and inside interest in acquiring or selling shares. SpaceX currently holds a valuation of $28B.
“We can afford to be picky (with investors). There’s a lot more people wanting our stock than we are willing to sell. It’s a great place to be in.” – Gwynne Shotwell, COO of SpaceX (CNBC, May 2018)
With Tesla being private, the company would forgo reporting quarterly earnings, most SEC filings, and annual shareholders meetings. Additionally, Tesla would have more flexibility in their accounting practices and reporting and less regulatory concerns. Essentially, as Musk as stated, the company would be able to operate more efficiently.
Only time will tell if Musk can pull off “taking Tesla private”. Given the size of the private markets and Musk’s drive to reduce distractions within the company, Tesla could certainly end up going private. I wouldn’t bet against Musk, just a personal rule, and it wouldn’t be out-of-character for Musk to pull off the impossible.
Great reads:
Tesla board curbs critics’ doubts as Elon Musk’s privatization plan starts forming (Teslarati)
Elon Musk: The Architect of Tomorrow (Rolling Stone)
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Google almost bought Tesla when it had just two weeks of cash left (The Guardian)
How SoftBank Is Reshaping Global Tech (The Information)
Elon Musk
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
Elon Musk told SpaceX staff AI revenue will soon dwarf rockets and Starlink combined entirely.
Elon Musk told SpaceX employees this week that artificial intelligence, not rockets, will soon carry the company’s revenue. In a roughly 29 minute internal address posted on SpaceX’s X account on Tuesday, Musk said AI revenue will pass every other line of business at SpaceX “probably in September” and pull further ahead by the fourth quarter.
The numbers he gave are specific. SpaceX currently runs 1.4 gigawatts of AI compute capacity. Musk wants that at 10 gigawatts by the end of 2027, a jump he tied directly to revenue: “if we bring 10GW of AI online by the end of next year, it will be $300 billion to $500 billion a year in revenue.” He called those “big numbers,” which undersells a projection larger than what most countries produce in a year.
We made rockets reusable and are rebuilding the internet in space. The next challenge: making life multiplanetary and understanding the true nature of the universe
Watch @ElonMusk deliver a company update to @SpaceX employees pic.twitter.com/5c8rxoCQfu
— SpaceX (@SpaceX) August 11, 2026
Musk went further on where AI fits into SpaceX’s future. “Probably in four or five years, AI will be 99% of the value of SpaceX,” he told staff, adding that digital intelligence would eventually run “a trillion times” ahead of biological intelligence as computing scales. He tied that growth to the company’s founding mission, telling employees “we must win on AI, because the future is overwhelmingly AI and robots,” with the payoff meant to help fund Starship and a Mars program that increasingly runs through Terafab, the joint Tesla, SpaceX and xAI chip plant.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry
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None of this is entirely new territory. SpaceX told investors much the same story during its first earnings call as a public company on August 4, where Musk moved the company’s $1 trillion revenue target up a year to 2030 and said Starlink could someday carry a majority of the world’s internet. What the all hands video adds is a hard deadline and a specific power figure Musk had not given publicly before, along with a franker pitch to his own workforce that AI, not launch cadence, is now the thing SpaceX is betting its future on.
The AI revenue itself is not coming from SpaceX training its own models. It is largely Starlink acting as the network layer for xAI’s workloads, plus SpaceX renting out compute capacity directly, the same approach behind the roughly $16 billion the company spent on AI infrastructure in a single quarter.
Musk closed the video with a pitch aimed at recruiting and retention rather than investors, telling employees that anyone who helps SpaceX win the AI race will eventually get the chance to go to the moon or Mars themselves. Whether SpaceX can turn 1.4 gigawatts into 10 in seventeen months is the more immediate question, and one that will show up in quarterly numbers well before anyone leaves Earth.
In a new note to investors on Tuesday, Morgan Stanley analyst Andrew Percoco said that Tesla has one big financial question to answer for investors regarding its Robotaxi rollout, Full Self-Driving software, and Optimus.
Percoco said in the note that, for the most part, investors are still very positive about the direction the company is headed. However, there are some things the firm would like to see, and they have to do with financials.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla bulls are more than convinced that the company’s Full Self-Driving software is proof it can develop physical AI. Financially, however, there are still some questions, especially on elevated spending, which CEO Elon Musk said would occur as the company works to roll out Robotaxi faster and continue developing its Optimus robot.
The latter two are where Tesla will have to prove progress to investors, as Percoco writes that both projects “will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof points to support the ROI on elevated capex.”
Percoco said the second quarter earnings call did not change his long-term thesis of where Tesla is positioned in the AI race, which is out in front. However, there are concerns that weaker gross margins and higher R&D spend will stress financials, and that has “sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus.”
Additionally, Robotaxi still needs to be proven with more operation in existing cities while maintaining safety but improving how many rides it gives in any given time, he said. For Optimus, Percoco wrote that he is “still looking for evidence beyond commentary around SOP.”
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Morgan Stanley put Percoco in charge of covering Tesla after long-time analyst Adam Jonas transitioned to the automotive side.
Currently, Morgan Stanley has a $415 price target on Tesla and a ‘Hold’ rating on the stock. It is trading at around $330 at the time of publication, which was 2:30 P.M. on the East Coast.
SpaceX’s massive investment in AI will make it a big winner, Argus Research said after the company’s successful earnings call last week.
The firm also upgraded shares to a Buy from Hold and set a $160 price target.
SpaceX (NASDAQ: SPCX) is currently recovering from its heavy AI infrastructure investments, as it spent nearly $16 billion in Q2 alone. The company did this primarily by monetizing high-demand GPU compute capacity at a much faster pace than traditional data center economics would suggest.
Company CFO Bret Johnsen said that SpaceX would be able to pay back anything on new deployments within a year.
There are plenty of ways the company can do this:
Leasing excess compute capacity through contracts
SpaceX has already built Colossus and Colossus II, largely for its own model training. However, much of that capacity is already rented out to third parties. It already has major deals with Anthropic, Google, and Reflection AI. These partnerships are adding billions per month to SpaceX’s spreadsheet.
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High utilization driven by industry-wide scarcity
The demand for advanced AI training and inference capacity continues to exceed what is available for use. SpaceX can fill new racks quickly after they come online, so the capital deployed converts into revenue with minimal idle time.
Additionally, management and outside observers have described the new compute capital as behaving more like a cost-of-goods-sold than traditional multi-year capex, especially because of this rapid monetization pattern.
Capacity has already scaled from ~0.4 GW a year to 1.4 GW annually by the end of Q2. There are targets of more than 2 GW by year-end.
High incremental margins on the rental business once capacity is online
GPU cloud providers often operate at strong gross margins. SpaceX can monetize capacity that was already partially built or can be added efficiently. This means that incremental EBITDA margins on the rental revenue are usually high. This accelerates cash recovery relative to the gross capital outlay.
Parallel monetization of its own AI software and applications
Beyond pure infrastructure rental, SpaceX also generates revenue from Grok through subscriptions and usage, from X through ads, data, and other related services, enterprise APIs, and the planned integration of the Cursor coding tools acquisition.
These application layers ride on the same compute infrastructure and provide additional high-margin streams that could offset build-out costs. AI-segment revenue overall rose sharply to about $2.6 billion in Q2, according to Motley Fool. This was driven primarily by the infrastructure contracts, but the software side is also partially responsible.
Efficient, large-scale deployment and vertical integration advantages
SpaceX has emphasized the rapid construction of power and cooling infrastructure and favorable cost-per-megawatt economics relative to industry benchmarks in some disclosures.
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Combined with its ability to scale capacity aggressively and the fact that many contracts start generating revenue within months of capacity coming online, the effective payback compresses dramatically compared with more conventional multi-year data-center projects.
SpaceX’s dominant near-term recovery path will turn the AI clusters into a hyperscale-style compute rental business for other leading AI companies while still using a portion for internal models.
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