Key Points
Tesla's next-generation Roadster drove up a multi-story ramp, flipped in midair and flew over the rest of Tesla's lineup at a Thursday night event in Texas. Elon Musk says production starts in 2028.
Tesla's stock rose about 3% before the opening bell Friday, then reversed and closed down 2.1% at $354.72.
One analyst estimates that even 3,000 Roadsters a year would add just $0.06 a share to Tesla's projected 2029 earnings.
Barclays says a SpaceX-Tesla merger is feasible and could be announced before Tesla's annual meeting, which must be held by Dec. 6.
Tesla reports third-quarter results Wednesday. Analysts expect $0.45 a share, down from $0.50 a year ago.
Elon Musk promised a flying car. On Thursday night, he delivered one.
At SpaceX's testing facility in McGregor, Texas, Tesla's next-generation Roadster raced up a towering ramp, clung to the vertical roadway, flipped itself around with rocket-style thrusters and floated back to earth. Then it flew over a Model 3, a Model Y, a Cybertruck, a Semi and a Cybercab.
It also hit 60 miles per hour in under one second.
Investors cheered at first. Tesla shares rose about 3% before Friday's opening bell. Then the selling in tech took over, and the stock closed down 2.1% at $354.72. The Nasdaq fell 2.1% on the day.
What Tesla Actually Showed
The event lasted less than 30 minutes. The Verge described it as "more like a stunt show than a product reveal."
The car uses a fan-based suction system supplied by SpaceX that can generate up to two Gs of downforce. That's what let it drive up the ramp. For the flying part, the Roadster carries two ultra-high-pressure air tanks holding about 250 kilograms of compressed air, which feeds 10 nozzles that steer and lift the car.
What Tesla didn't show was just as important. There was no price, no release date and no order book. Musk said production would begin in 2028. That's nearly nine years after the Roadster was first promised.
"This will be an actual car that's on the roads," Musk said. The company later acknowledged it would not be road legal, according to The Verge.
Why Wall Street Shrugged
Analysts loved the engineering. They didn't love the math.
Gene Munster of Deepwater Asset Management called the demo "an engineering flex with no commercial value beyond embarrassing traditional car makers."
Gary Black of Future Fund ran the numbers. If Tesla sold 3,000 Roadsters a year at a profit of $100,000 each, it would add about $0.06 a share to his projected 2029 earnings of $5.40 a share. That's barely more than 1%.
JPMorgan kept its Neutral rating on the stock after the event.
The Bigger Story Is SpaceX
What the Roadster did do was put Musk's two biggest companies side by side. The car flew on SpaceX hardware, at a SpaceX facility.
Dan Ives of Yorkville Ives said the event puts the spotlight back on a potential merger of the two. Barclays analyst Dan Levy wrote Thursday that a deal is feasible and is increasingly the consensus view.
Barclays sees SpaceX buying Tesla in an all-stock deal, with Tesla shareholders likely getting a premium. It values SpaceX at about $2.1 trillion and Tesla at about $1.5 trillion. Musk would end up with about 37% of the combined economics but roughly 56% of the votes.
The obstacles are real. Both sets of shareholders would have to approve, lawsuits are likely, and regulators would have to weigh SpaceX's U.S. defense contracts against Tesla's factories in China.
This isn't the first time Musk has moved his companies around the board. Last week, SpaceX spent about $8 billion on wireless spectrum and wiped $39 billion off the phone carriers in a day. Dylan laid out what concerns him about that move, and why Musk tends to buy the scarce ingredient rather than the company.
What Lands Next
The real test comes Wednesday, when Tesla reports after the close.
Analysts expect earnings of $0.45 a share on revenue of $27.85 billion, according to MarketBeat. A year ago, Tesla earned $0.50 on $28.10 billion. Last quarter, it posted $0.33 a share, well short of the $0.50 analysts expected.
Tesla delivered 486,532 vehicles in the third quarter, up from the second quarter but below the 497,099 it delivered a year earlier.
Investors don't seem focused on cars. The most popular shareholder questions for the call are about Cybercab, robotaxi economics and when the Optimus robot will start generating revenue.
SpaceX reports its own results on Tuesday. So within about 24 hours, investors will see the books of both companies Musk may want to combine.
The Roadster proved Tesla can still put on a show. Wednesday will show whether the business can keep up with the spectacle.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
Found this helpful? Share it with others.