• Tesla shares fell around 15% after missing earnings targets, while SpaceX shares have dropped nearly 50% from their highs.View more

Tesla shares fell 14.5% on Thursday—erasing $215 billion of market value—after the electric vehicle maker missed earnings targets and had negative cash flow for the first time in two years. It was part of a wider stock selloff amid fears that big tech companies are overspending on artificial intelligence.

On an earnings call, Musk walked back earlier guidance on the rollout of its Robotaxi ride-hailing service, Optimus humanoid robots and an electric semi truck that has been in development for years.

Shares of SpaceX, which went public at $135 and traded above $225 in the days after its debut, are down nearly 50% from those highs. The stock broke below its initial-public-offering price within weeks and has lost more than $1 trillion in value from its peak.

The declines deepened last week after SpaceX postponed a test launch of its Starship rocket and as investors anticipate a flood of shares being freed from lockup restrictions in early August. That would allow insiders to sell some of their stakes, putting further pressure on the share price.

Investors are still waiting for the next Starship test mission, which SpaceX pushed from Thursday to Friday evening because of poor weather in Texas.

Samer Halawi, a consultant and former satellite executive, said SpaceX has exposed itself to more pressure by going public, especially as it pursues untested concepts like deploying AI satellites. 

“Access to capital is going to be scrutinized,” Halawi said. “When you’re a public company, people are going to expect a return. You can’t operate the same way you’ve been operating.”

SpaceX and Tesla are still among the most valuable U.S. companies, valued at $1.57 trillion and $1.26 trillion, respectively. Investors continue to place a premium on Musk’s leadership of the companies and his ambitious product road maps. 

True believers see Musk as a visionary capable of seizing markets long before they exist, citing Tesla’s dominance in the electric-vehicle market and SpaceX’s success in the rocket-launch business. Musk has promised to transition both companies into dominant forces in an AI arms race in which they are behind.

“I love Tesla and have been a superfan for well over a decade,” Tesla influencer Dillon Loomis posted on X ahead of the earnings report. “If these goals are so uncertain, please just don’t share them. Say whatever you want internally, but to say them publicly and not even get close does nothing but hurt the company and many following it.”

In an earnings call Wednesday, Tesla executives responded to questions from individual investors frustrated by the slow rollout of its Robotaxi ride-hailing service, which expanded to its seventh city in July. Musk in January had said that the service would be in a quarter to half the U.S. by the end of the year.

Musk continued to tease a future demonstration of Tesla’s third-generation Optimus robot, which he previously said would be demonstrated in the first quarter. Tesla also told investors in its earnings slides that it planned to start production for its all-electric semi truck by the end of the year, despite Musk telling investors in April that production would start “soon.”

For SpaceX, much of the company’s promises ride on the success of its Starship rocket, which is still under development. A July 16 launch was scrubbed after problems with engines on the rocket’s booster. The stock’s weakness following that delay prompted some SpaceX fans, who closely monitor and cheer its launches, to share their frustrations in social-media posts.

The company needs to move Starship from a test phase and start using it on revenue-generating missions. In an IPO filing, SpaceX said it expects to begin deploying upgraded Starlink satellites with Starship during the second half of this year. 

Also pressuring SpaceX shares is the reality that insiders will be allowed to sell some of their holdings shortly after the company hosts its first-ever earnings call on Aug. 4. The lockup expiration on Aug. 6 will add up to 911.5 million shares to the market, roughly doubling the amount that are freed to trade.

Investors and analysts have speculated that Musk, who is the biggest individual shareholder in the two companies, could try to merge SpaceX and Tesla into a single AI-focused company.

“There’s more and more overlap, especially with Terafab,” Musk said, referring to a multibillion-dollar joint venture to develop and manufacture chips in Texas. “But obviously we can’t talk about, you know, combining companies and that kind of thing on earnings calls. It’s got to be done with the appropriate process.”