SAN FRANCISCO — Tesla's stock dropped nearly 18 percent this week, its worst slump since 2022, closing at $313.03. The decline follows an earnings miss and a shift to negative cash flow—a sharp reversal for the electric vehicle maker.
Negative cash flow tightens Tesla's ability to fund its product roadmap and factory expansions without tapping external capital. The result raises hard questions about capital allocation at a company competing in a maturing EV market where margin pressure is structural, not cyclical. The Nasdaq fell 0.6 percent to 24,976 on the day.
The earnings miss reflects the cost of Tesla's sustained price cuts, which were designed to defend volume but have eroded gross margins and reduced the free cash available for research and development. Traditional automakers and new entrants continue to close the gap, leaving Tesla less room to absorb that margin compression.
SpaceX, Musk's other major venture, also faced headwinds this week. Valuation sentiment slipped ahead of the company's next Starship test flight, a program central to its future revenue model.
Starship's development underpins SpaceX's plans to deploy its next generation of Starlink satellites and pursue government contracts for lunar and Martian missions. Each delay translates directly into higher capital expenditure and deferred revenue—a compounding problem for a private company with no public market to absorb the cost.
