Investor's Corner
Tesla is poised to survive 2020’s worst economic shocks; other automakers, not so much
Just before being proven wrong by Tesla’s first-quarter delivery and production numbers, TSLA bears were hard at work, spreading the now-aging narrative that the company’s electric cars will soon see a drop in demand. Hours before Tesla released its numbers, short-seller Jim Chanos even remarked that he remains “maximum short TSLA,” arguing that the company stands to lose money this year.
What the noted short-seller failed to mention was that this year would likely be downright brutal on the entire auto industry. 2020 only started, but the onset of the coronavirus pandemic has given the whole car market an economic shock that will resonate for a substantial period of time. Tesla will see adverse effects, most likely in the second quarter, but compared to the rest of the industry, the electric car maker may very well be poised to be a company that can not only survive, but thrive in these times of crisis. The same cannot be said for legacy carmakers, or the scheduled “Tesla Killers” that are set to be released in the near future.
Gene Munster of Loup Ventures noted that Tesla’s Q1 production and delivery results show that Tesla is winning despite the current headwinds simply because it has a product that is measurably better than both gas and electric competitors. The Wall Street veteran further added that while the next quarters will be challenging for Tesla and all other automakers like BMW and General Motors, he still expects Tesla to continue reporting 15-25% better delivery results compared to its peers.
A lot of this is due to the company’s products, specifically the Model 3 sedan and the Model Y crossover. Both vehicles are high-volume EVs, and they are designed to disrupt their respective segments. The Model Y, in particular, is designed to be competitive in the crossover market, which happens to be one of the fastest-growing segments in the auto industry today. Munster argued that over time, the price and performance gap between Tesla and its competitors would likely get broader. This is because rivals, such as legacy automakers and their respective EVs, will either have to sell a vehicle that’s at parity with Tesla’s features and range but at a higher price, or a car whose cost is subsidized by the company, resulting in financial strain. For automakers, such is a notable dilemma.
Tesla investor @Incentives101, an economist with a background in macro research, stated in a message to Teslarati that the demand for the electric car maker’s vehicles will largely depend on how distinct they are from other EVs on the market. It’s quite difficult to analyze a product’s demand from a consumer preferences standpoint. In the case of apparel, for example, it is challenging to determine why some consumers prefer Adidas over Nike. The auto industry is quite the same. When one looks at the demand for vehicles, it is difficult to pinpoint why some consumers buy a BMW 3-Series over an Audi A4, or a Mercedes-Benz C-Class; or why some customers buy a Honda Accord instead of a Toyota Camry.
Explaining further, the economist noted that instances such as these usually mean that the products consumers are purchasing are almost perfect substitutes for each other. If one were to study the size, efficiency, performance, and price of any category of cars, one would see that the differences are usually so marginal between each option and segment that consumer decisions often fall on subjective variables such as looks or brand loyalty. This is something that veteran automakers such as Ford rely on, with the company being proud of F-150 owners sticking with the company for years, or at times, even generations.
In the auto sector, there are various tradeoffs that customers are likely to compromise with. For buyers of cars with an internal combustion engine, opting for a low price will likely sacrifice performance, as is the case with the Toyota Camry. Buyers of electric vehicles from traditional automakers, on the other hand, will probably sacrifice something vital such as range for performance, as is the case with the Porsche Taycan. Tesla’s electric vehicles have pretty much eliminated these tradeoffs over time, largely thanks to the company’s own experience in producing and designing electric vehicles and their unique vertical integration, which provides the company unprecedented control over their products and the way they function.
Amidst the coronavirus pandemic, the health and economic shock that the world is facing are unprecedented. These shocks affect everyone, and for automakers, it will all come down to whoever can recover the fastest. Veteran automakers are fighting at a disadvantage as Tesla extends its gap in performance and tech. Tesla, on the other hand, may very well be poised to hit the ground running and crush its competitors in the process. The Model 3 and Tesla’s first-quarter results highlighted how demand for the company’s vehicles would likely be steady. As for demand concerns about Tesla, the economist noted that such concerns remain overblown.
“Until today, demand concerns about Tesla vehicles are overblown and based on a poor understanding of economics. Demand is a function of consumer preferences, basically what consumers value. It is also a function of income, price of substitutes, and few other things. How much each of these variables affects demand is not static. It may be that consumer preferences don’t change but income does, so in a scenario of rapid economic downturn with relatively fast recovery demand for Tesla would behave the same,” the economist wrote.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Elon Musk said he is planning to give “every one of his SpaceX shares to every kid in America” in 2027, stating that “this will be the first of many.”
SpaceX went public earlier this year, and its stock price has been relatively stable since leveling off shortly after its IPO. Based on its current price, it’s a gift of just over $10 billion to children across the United States.
It appears to be closely related to President Donald Trump’s bank accounts for children, which were set up earlier this year as Trump Accounts.
Just hours earlier, Anthropic had announced the establishment of its Anthropic Public Benefit Fund, “a new wholly-owned entity dedicated entirely to public benefit.” Musk responded by stating he recommended “giving the shares directly to the public,” and that he would be doing it that way.
Just a little bit later, Musk said children across the U.S. would be getting a share from him:
Next year, I will give one of my SpaceX shares to every kid in America.
This will be the first of many.
— Elon Musk (@elonmusk) October 19, 2026
There are roughly 70 million children, meaning someone under the age of 18, in the United States, according to the Federal Interagency Forum on Child and Family Statistics. Musk’s ownership of SpaceX stock shows he has around 849 million Class A shares of SpaceX stock, according to filings with the SEC.
Investor's Corner
SpaceX’s biggest earnings test yet lands Tuesday, and Tesla shareholders should be watching
SpaceX reports earnings Tuesday as Wall Street watches AI spending, Starlink growth and Tesla merger
SpaceX reports third quarter results after the market closes Tuesday, with a webcast at 4:30 p.m. ET streamed on X, and Tesla follows a day later. Bloomberg consensus, cited by Pepperstone, calls for revenue of $12.89 billion, adjusted EBITDA of $6.62 billion and adjusted EPS near $0.15. That would be about 65% growth from the second quarter and SpaceX’s first profitable quarter since its IPO. Analysts expect roughly $6.4 billion from AI and $4.9 billion from Starlink, which is projected to reach 14.3 million consumer subscribers. Capital spending is forecast at $19.6 billion, leaving free cash flow near negative $11.6 billion.
The numbers matter because SpaceX has spent months trying to win over a skeptical market. It priced its record IPO at $135, spiked to $225.64, then sank near $105 in early August. Friday’s close of $146.03 sits about 28% below the June high. The Q2 report beat on revenue at $7.8 billion and put Starlink at 12 million subscribers, but $18.4 billion of capex hurt the stock. Since then SpaceX reached orbit on Starship Flight 14 with 26 Starlink V3 satellites, agreed to buy 800 MHz spectrum for about $8 billion as part of its Starlink Mobile push, and signed a fourth compute hosting deal in four months worth roughly $13 billion a year from December. Management is targeting more than 2 gigawatts of compute by year end and a $100 billion annualized revenue run rate. Evercore ISI, which raised its target to $275, said the quarter may be judged more on those targets than the reported figures
All of this sits under the Tesla merger question. Barclays analyst Dan Levy expects an all stock deal in which SpaceX buys Tesla at a premium, using reference values of $2.1 trillion and $1.5 trillion, and said an announcement would need to come by late October or early November to be voted on at Tesla’s December 6 annual meeting. Barclays estimates Musk would hold about 37% of the combined company and 56% of the votes. Musk said in July that combining companies cannot be discussed on an earnings call, but an investor question asking when SpaceX will merge with Tesla is sitting on SpaceX’s Q&A platform, and Teslarati has tracked how the Roadster demo revived the talk.
If a deal happens, Tuesday’s result would effectively set the price Tesla holders would receive. Their shares would convert into SpaceX stock, along with exposure to a company with a heavy investment on AI, while Tesla itself expects 2026 capex above $25 billion. A strong quarter and calmer spending would make that exchange easier to sell. Another round of heavy capex and a falling stock would make it harder.
Investor's Corner
Tesla’s flying Roadster just revealed something bigger than the car
Analysts say the Roadster demo puts a Tesla and SpaceX merger back on the table.
The Roadster unveiling near Waco ended Thursday night, and by Friday morning much of the investor reaction had less to do with the car than with who owns the rocket technology inside it.
Wedbush analyst Dan Ives said the event “puts the Tesla/SpaceX relationship on the table in a tangible way,” pointing to the propulsion, pressure vessel and control hardware sitting on a Tesla product. Gene Munster of Deepwater Asset Management called the demo “a ridiculous display of engineering” with “no commercial value” beyond embarrassing traditional automakers, though he said it showed Musk wants the two companies together.
The more specific forecast came a day earlier from Barclays. Analyst Dan Levy told clients a deal could be announced before Tesla’s annual meeting, which must happen by December 6, and that an announcement in late October or early November could make shareholder approval harder. Barclays expects SpaceX to be the buyer in an all stock deal, with Tesla holders receiving SpaceX shares at a premium, based on market values of roughly $2.1 trillion for SpaceX and $1.5 trillion for Tesla. If nothing lands around the meeting, the bank still sees an announcement within 6 to 12 months.
The Roadster demo just added more weight to merger speculations. Tesla’s demo used cold gas thrusters and pressure tanks of the kind SpaceX uses on Falcon 9, and Musk described the car as a collaboration between Tesla and SpaceX engineers, as we mentioned in our breakdown of the three Roadster configurations.
Musk has not publicly addressed a deal since the event, as far as we have seen. His most direct answer remains the one he gave at the All In Summit, when he said that with so much collaboration, “who can imagine what action one might take” without ruling anything out. Ives has held to a 2027 timeline since his March note, and Musk pushed back on the China piece of the speculation when ARK floated a year end announcement in August.
The next test is Tesla’s third quarter earnings call on October 21. However, we recall in July that Musk told analysts, “we can’t talk about combining companies and that kind of thing on an earnings call,” so a clear answer wouldn’t be expected.
Elon Musk will give ‘every kid in America’ a SpaceX share in 2027
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Tesla CEO Elon Musk reminds everyone about Roadster’s true meaning
SpaceX reveals how its 1 Million AI satellite network will work and prevent space collisions
Tesla Roadster: Three configs, one can fly, 0-60 in 0.8 seconds
