Tesla shares fell after the company’s first-quarter earnings report on Wednesday as the company expanded its capital spending by more than expected, but Wall Street has been fueled by speculation that the company will remain underbid for the foreseeable future. The conversation is about a possible merger with SpaceX, Elon Musk’s Great Leap Forward rocket company. SpaceX plans to go public later this year at a valuation close to $2 trillion. “The takeaway from this is that Mr. Musk is focused on a long list of projects that combine the TSLA project with the upcoming SpaceX IPO,” the Baird researchers wrote in a summary of Wednesday’s report. “In the very short term, we believe the stock is likely tied to rumors of a SpaceX IPO or possible merger.” Analysts remained fairly general about the impact of the IPO and continued to focus on Tesla’s multiple projects and developments, but cautioned that it would be unwise to bet on the stock with this potential. “In the short term, we believe the pending SpaceX IPO (private) will dominate discussions about Tesla, both directly and indirectly, from how many CyberTrucks SpaceX can deploy to a possible Tesla SpaceX merger,” Ross analysts wrote Thursday. Wall Street has been buzzing about the merger speculation for some time, arguing that traditional valuation metrics for a broad company like Tesla are of little use. “The logic of the Tesla-SpaceX merger will continue to be closely watched,” Jefferies analysts wrote in an April 19 note to investors. “Traditional valuation metrics are of little use, and the stock price is driven by sentiment and confidence in operational development and sustained innovation. Tesla is last down about 3%. The stock has fallen a bit in 2026, but has stabilized around recent levels. Despite the less-than-stellar performance in the auto sector, the stock is still up nearly 60% over the past 12 months. TSLA YTD Mountain Tesla, YTD Jeffries, warned: “Ambitious capital spending plans are set to create a loss center for some time” – As Tesla raised its annual capital spending plans from $20 billion to $25 billion, some analysts said on the earnings call that this could potentially push Tesla’s free cash flow into negative territory. During the conference call, CEO Elon Musk talked about how the company’s business works between its various companies, specifically ramping up semiconductor manufacturing. “SpaceX will be responsible for the initial stages of the scaled-up Terrafab,” he said, noting the complications that arise because Tesla and SpaceX are separate companies. “Any type of intercompany discussions would need to be approved by both the SpaceX and Tesla boards.” “Unfortunately, it will be very complex, as we will have to reliably serve Tesla shareholders and SpaceX shareholders and strike the right balance. Mr. Musk has made comments explaining the complexity of intercompany transactions, which we believe support the case for merging all entities over time,” Baird researchers wrote on Wednesday. “In our view, analyst sentiment was mixed about the progress of Tesla’s various projects (taxi, self-driving, energy storage, robots, etc.).”As for full self-driving, “occupancy rates seem to be improving here, with fewer cancellations,” Rob Wertheimer wrote for Melius on Thursday. Stifel researchers said the development of power generation and storage in Tesla’s fast-growing energy business is “weak.” The $2.41 billion was lower than our forecast of $3.28 billion, a decrease of 37.2% compared to the fourth quarter of 2025, and a decrease of 11.8% compared to the same period last year. Tesla installed 8.8 gigawatt-hours of energy storage in the first quarter, a 38% decrease from the previous quarter. “We still expect the number of deployments in 2026 to be higher than in 2025,” CFO Vaibhav Taneja said Wednesday.
