Dear Reader,
Good morning.
Simmy Adelman here with Behind the Markets.
This evening, after the market closes, Tesla reports earnings.
The webcast starts at 5:30 PM Eastern.
And I want to help you understand what you're actually looking at — because this is one of the most complicated earnings stories in the market right now.
The Good News Is Already Out
Tesla had its best second quarter in company history.
480,126 vehicles delivered — up 34% from Q1 and a new quarterly record.
Energy storage deployments hit 13.5 gigawatt-hours — up 53% quarter over quarter.
Analysts are expecting $27.3 billion in revenue and EPS of around 31 cents.
By almost every operational measure, Tesla is executing.
And yet the stock has declined heading into tonight's report.
That tells you something important.
The market isn't worried about deliveries.
It's worried about something much harder to measure.
The Question Nobody Can Answer Yet
Tesla trades at 349 times earnings.
Let me put that in perspective.
The average S&P 500 company today trades at an elevated 32 times earnings.
Tesla trades at 11 times that multiple.
That is not a car company valuation.
That is not even a tech company valuation.
That is a bet — a very large, very expensive bet — that Tesla becomes something entirely different from what it is today.
Specifically, the market is pricing in Tesla becoming a leader in three things that don't yet generate meaningful revenue: autonomous vehicles, humanoid robotics, and AI infrastructure.
Robotaxis.
Optimus.
The Terafab chip factory.
Tonight's earnings call won't answer whether any of those bets pay off.
But it will answer whether the company is making real, measurable progress toward them — or whether Elon is still asking investors to trust the vision without showing the receipts.
The Musk Problem
Tesla isn't really a car company anymore.
It's a robotics and AI company that happens to make cars.
And that transformation is happening at the same time Elon is running SpaceX, xAI, overseeing the Golden Dome satellite contract, and managing the political fallout of his role in the Trump administration.
That is an extraordinary amount of distraction for the CEO of a company trading at 349 times earnings.
Insider selling hasn't helped.
Over the past three months, Tesla insiders have sold $12.4 million worth of shares.
That's not a massive number in absolute terms.
But when you're asking the market to trust a transformational vision, insiders selling into that story sends a mixed message.
What the SpaceX Connection Tells You
Last week we wrote about whether Tesla and SpaceX might eventually merge.
The stocks have been trading in sync.
The companies are already sharing infrastructure, executives, and technology through the Terafab semiconductor venture.
Tonight's earnings call is actually relevant to that story too.
Because the more Tesla can demonstrate that its AI and robotics investments are generating real returns — not just narratives — the more credible the case becomes that a combined Tesla-SpaceX entity would be worth something extraordinary.
And the more it becomes clear that Tesla's AI story is mostly future tense, the more the merger idea looks like a financial engineering solution to a valuation problem rather than a genuine strategic vision.
What to Watch Tonight
Three things matter most on tonight's call.
First, margins.
Tesla has been cutting prices aggressively to drive deliveries.
Strong delivery numbers mean nothing if the company is losing money on each car to get there.
Watch gross margins closely.
Second, Robotaxi updates.
The Cybercab has been in limited deployment in a handful of cities.
Tonight Elon needs to give investors something concrete — timelines, expansion plans, revenue numbers — or the market will start questioning whether it ever scales.
Third, Optimus.
Tesla has been manufacturing Optimus robots at its factory.
Elon has claimed Optimus will eventually be worth more than the entire rest of the company.
Tonight investors will want to know: how many are actually deployed, what are they doing, and when does this generate revenue?
If the answers are vague, expect the stock to sell off regardless of the delivery numbers.
The Honest Assessment
Tesla is one of the most fascinating and most dangerous stocks in the market right now.
Fascinating because if even one of its big bets — robotaxis, Optimus, Terafab — pays off at scale, the company could be worth multiples of its current valuation.
Dangerous because at 349 times earnings, it feels like paying for all three to succeed simultaneously.
That's a lot of things that need to go right.
The best investments are the ones where you're not betting on a vision.
You're following the money that's already moving.
On June 22nd, the President signed two executive orders launching the biggest shift in American technology infrastructure since the Manhattan Project.
Not AI hype. Not a promise on an earnings call.
Signed federal policy. Two billion dollars committed. And a letter of intent to take an ownership stake in a $20 quantum chip company most investors have never heard of.
The same playbook that handed early investors 2,700% on Palantir. 595% on Intel. 167% on MP Materials.
When Washington takes a stake, it's not a bet. It's a signal.
Former Wall Street banker Dylan Jovine has the full story, the name, and the ticker.
Tonight's call won't settle this debate.
But it will tell you a lot about whether the wait is getting shorter or longer.
Have a wonderful Wednesday.
All the best,
Simmy Adelman, Editor-in-Chief
Behind the Markets
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Written by Simcha Adelman