Tesla shares slip after capex cut raises doubts over Musk's AI and robotics push
Oct 22 (Reuters) - Tesla's TSLA.O shares fell 2% on Thursday after the EV maker cut its capital spending forecast, raising concerns among investors counting on heavy investment for Elon Musk's AI and robotics vision.
The company on Wednesday lowered its 2026 capital spending forecast to about $20 billion from more than $25 billion after spending far less than expected on AI and robotics in the third quarter, which led to a surprise positive free cash flow.
The strong position may prove valuable as CEO Musk explores combining Tesla with the far more capital-intensive SpaceX SPCX.O.
Capex is a delicate balance in this market, said Josh Gilbert, lead analyst at etoro. Investors welcome a larger budget if they can see returns, but a smaller one hints at slowing growth, he added.
"For a stock priced on Cybercab and Optimus, that (capex forecast cut) explains why the shares went nowhere on a result that beat on most measures."
Tesla did not break down the areas that would see spending cuts and the leadership on Wednesday attributed the adjustment to managing capital deployment efficiently.
Tesla's shares have declined about 14% this year, in contrast to the Nasdaq's .IXIC roughly 15% gain. The stock is about 23% below its record intraday high of $498.83, reached in December.
Its valuation, however, remains well above peers: Tesla traded at 188.24 times its forward earnings estimates, compared with 6.58 for Ford F.N and 5.16 for General Motors GM.N.
Tesla and SpaceX SPCX.O have formed special committees to discuss a potential mega-merger, Musk said on Tuesday. The move could create an AI, cars, satellites and rockets behemoth worth about $3.5 trillion.
"The risk is Tesla now enters a period of limbo while investors await news on a potential combination with SpaceX, which ... might face significant regulatory hurdles," said Russ Mould, investment director at AJ Bell.