Tesla stock drops as the company raised its 2026 capex plan to $25 billion from $20 billion

Tesla stock is falling today because investors are dealing with rising spending, merger talk, and a market that chases big stories when numbers look weak.

After earnings on Wednesday, the stock moved lower as traders focused on a spending plan that came in bigger than expected. Tesla raised its full-year capex target to $25 billion from $20 billion, bringing back fears about weaker cash generation.

The drop has not turned into panic because another theme is keeping traders interested. Wall Street is buzzing about a possible linkup between Tesla and SpaceX, which is expected to go public later this year at a valuation close to $2 trillion.

Analysts said it may be risky to bet too hard against Tesla because the stock may trade less on valuation math and more on sentiment. Even after a pullback in 2026, the shares are up nearly 60% over the last 12 months, despite weak results from the car business.

Wall Street pushes SpaceX merger talk as Tesla spending jumps

Tesla is spending more, and some analysts think that could push the company into negative free cash flow later this year. Jeffries had warned that aggressive spending plans could create loss centers for a while, and the earnings call backed up that concern. It was last down about 3% as traders weighed the larger budget against a business under pressure in autos.

Still, several firms said the bigger debate may now be about SpaceX rather than just quarterly earnings. Baird said Elon Musk is locked in on a long list of Tesla projects while also heading toward a SpaceX IPO, adding, “In the very short term, we think the stock is likely linked to SpaceX IPO and potential merger rumors.”

Roth said the coming public listing could dominate the conversation around Tesla, from direct effects to indirect ones, including how many CyberTrucks SpaceX could buy and whether a merger could happen.

Jeffries said the logic of combining Tesla and SpaceX will stay front and center because normal valuation tools do not do much for a company this wide and story-driven.

Elon adds fuel as analysts split on Tesla projects and market support

The merger chatter got fuel from Elon during the call. While talking about Terafab, his semiconductor fabrication project, he said SpaceX will handle the initial phase of the scaled-up buildout. He also said any deal between the companies has to be approved by both boards and go through conflict resolution.

Elon added, “It’s going to have a lot of, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there.”

Baird said those comments support the idea that Elon may want all the entities merged over time, and that headlines around the SpaceX IPO could drive Tesla shares.

Views on Tesla’s projects were mixed. Melius said full self-driving take rates are improving and cancellations are low. Stifel called the company’s energy storage performance weak. It said segment revenue came in at $2.41 billion, below its $3.28 billion forecast, down 37.2% from the fourth quarter of 2025 and down 11.8% from a year earlier. 

Tesla deployed 8.8 gigawatt-hours of storage in the first quarter, a 38% sequential drop. Vaibhav Taneja said 2026 deployments should top 2025. Analysts were also mixed on taxis, automated driving, storage, and robots.

The wider market backdrop helps explain why the reaction has not been worse. Investors see an off-ramp in the Iran conflict after Trump extended the ceasefire. 

Many are using the early-2022 Ukraine-war dip-buying playbook. Oil has been cushioned by reserve releases, spare producer capacity, and weaker demand, though Hormuz risk remains. 

Earnings helped, with nearly 80% of reporting S&P 500 companies beating estimates. AI trades are back, and SK Hynix posted a five-fold profit jump while reaffirming higher spending.

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