Tesla shares dropped in premarket trading on Thursday following a disappointing earnings report and cautionary remarks from Elon Musk, who warned of potentially “rough” quarters ahead. The electric vehicle company reported its steepest revenue decline in more than a decade, sparking renewed concerns among investors about its growth trajectory.
Fresh from a contentious appearance in Washington, Musk attempted to reassure analysts by promoting future-forward ventures such as robotaxis and humanoid robots, claiming these would make Tesla “by far the most valuable company in the world.” However, analysts are skeptical as Tesla now faces challenges similar to traditional automakers like General Motors and Stellantis, including macroeconomic uncertainty, shifting tariff policies, and political headwinds.
Tesla reported $22.5 billion in second-quarter revenue, falling short of already-lowered expectations. This figure marks a 12% year-over-year drop, and revenue from its lucrative regulatory credit business fell by over 50%, down to $439 million.
This is the latest in a string of quarterly declines, with falling profits stretching back to Q3 of last year. Many investors are beginning to worry that Musk’s heavy focus on ambitious future technologies, such as autonomous vehicles, may be drawing attention away from the core car business.
“There was a lot of uncomfortable realism mixed in with the futurism,” noted Steve Sosnick, chief strategist at Interactive Brokers.
Tesla recently launched its pilot robotaxi service in Austin, Texas, and Musk outlined plans to expand it nationally within the year. While some investors see promise in the initiative, others remain unconvinced. “There wasn’t enough there to excite,” said Sosnick.
At the same time, political developments are further complicating Tesla’s outlook. The Republican-led policy shift aims to eliminate tax credits for electric vehicles — a significant blow to Tesla’s U.S. sales strategy. Although Musk initially downplayed the effect, analysts estimate this change could slash up to $1 billion from the company’s annual profit. Musk later admitted, “We are in this transition period where we will lose a lot of incentives in the U.S.”
In contrast, Google’s parent company Alphabet is enjoying a positive response from Wall Street. Shares climbed after the tech giant posted better-than-expected earnings, easing concerns that AI competitors like ChatGPT would cannibalize its search business.
The company also announced plans to boost capital expenditures to $85 billion, largely to support data center growth and AI infrastructure. CEO Sundar Pichai assured investors that “AI is positively impacting every part of the business.”
The Trump administration continues to play a key role in shaping markets. This includes supporting AI development with regulatory rollbacks, as seen in the recent signing of an “AI Action Plan,” which aims to make the U.S. a leader in the sector. However, the push comes with conservative guardrails — such as excluding DEI, climate, and misinformation content from AI training guidelines.
On the trade front, optimism is rising as reports suggest the European Union is nearing a deal with Trump’s team for a 15% tariff on most U.S. imports. That news lifted European markets, especially auto stocks like Mercedes. Any agreement could have broader implications for central bank policy in the EU.
Retail investors have sparked another meme-stock rally, this time focusing on a group dubbed “DORK” — short for Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT), and Kohl’s (KSS). As in past surges, online communities like Reddit’s WallStreetBets are driving momentum.
Krispy Kreme in particular has seen an explosion in mentions, according to Ivan Cosovic of Breakout Point. “Then with the latest retail crowd’s storm — over 1,000 mentions in a day,” he noted.
McGraw Hill IPO: The edtech firm raised $415 million, valuing it at $3.2 billion — well below its 2021 acquisition price.
Biden’s Memoir Deal: The former president reportedly secured a $10 million book deal, trailing similar deals by Obama and Clinton.
Columbia Settlement: The university agreed to end race-based admissions and address antisemitism, regaining over $200 million in federal funding.
Klaus Schwab Investigated: The World Economic Forum is reportedly probing misconduct claims against its founder, including financial improprieties and bullying behavior.
NBCUniversal’s Sports Network: The media giant may launch a new sports-dedicated channel as early as this fall.
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