Tesla’s Roadster launch sent the stock flying — even if the car itself may barely move the earnings needle.
Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images
Tesla stock jumped in premarket trade after it unveiled its much-hyped new Roadster.
The car won’t drive big sales, but it does show off Tesla’s tech chops.
Gene Munster, a longtime Tesla bull, called the launch “an engineering flex.”
Tesla stock popped after hours as Elon Musk unveiled its new Roadster — but not because investors expect big sales of the futuristic supercar.
As a low-volume, high-end car, the Roadster won’t be a major earnings driver and will be a tiny part of Tesla’s business. Musk has long been clear that he doesn’t see Tesla’s future success in traditional cars, but in autonomous driving and humanoid robots.
Tesla stock has rarely traded solely on near-term car sales. Tesla trades at about 215 times forward adjusted earnings, a valuation that reflects investor expectations for growth beyond its core car business.
The demo of the Roadster’s sci-fi features — like briefly lifting off the ground and performing aerial maneuvers using SpaceX-inspired cold-gas thrusters — was more about showing off the company’s engineering muscles than attracting mass buyer interest.
At SpaceX’s test site in Texas, Tesla showed the Roadster performing jumps, rolls, and a controlled landing using cold-gas thrusters. The system uses high-pressure compressed air to generate short bursts of thrust and control, a technology that could have much wider applications, and appears to have piqued the interest of investors.
Gene Munster, a longtime Tesla bull, said in an X post that the launch was “an engineering flex with no commercial value beyond embarrassing traditional car makers.”
“The Roadster event is the latest example of why Elon can’t wait to bring Tesla and SpaceX together,” Munster added.
It is widely expected that Tesla and SpaceX, Musk’s rocket company, will merge in the coming years, building on the world’s richest man’s plans to create a super company.
Having traded more than 5% higher premarket, the stock was marginally up after Friday’s open, gaining 1% in the minutes after the open.
A departure from past product launches
Tesla’s previous product launches have not always impressed investors. Shares fell about 6% after the 2019 Cybertruck unveiling, when the vehicle’s supposedly shatterproof windows cracked during a live demonstration.
They also dropped 9% after Tesla’s 2024 “We, Robot” event, as investors judged the Cybercab reveal short on the detail needed to support its autonomous-driving ambitions.
Friday’s reaction marks a contrast. The Roadster launch has potentially revived the product narrative that has long supported Tesla’s premium valuation, even if the car itself is unlikely to meaningfully affect sales.
The rally comes as Tesla has stuttered both in its business and the stock market. Tesla’s second-quarter revenue rose 26% from a year earlier, and deliveries beat expectations, but profitability declined.
Operating margin fell to 1.4%, automotive gross margin excluding regulatory credits dropped to 16.3%, and free cash flow was negative by roughly $1.1 billion as capital spending increased.
Tesla’s core EV business remains under pressure from slower growth and tougher competition. But Friday’s move shows a halo product can still lift the stock by renewing investor attention on Tesla’s technology ambitions.
Read the original article on Business Insider
