Tesla’s Spending Puzzle

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Now, Tesla. A fascinating company, really. Shares are down a bit year-to-date – about 8%, if you’re keeping score, which as a trader, naturally, I am – despite the rather bold pronouncements from Elon Musk. He’s talking about self-driving taxis – “Cybercabs,” he calls them – appearing before 2027 for under $30,000. A curious price point, that. And he’s doubled down on April as the start of production. One wonders if his calendar is as meticulously planned as his rocket launches, or if it’s more… aspirational. It’s a bit like promising to circumnavigate the globe in a bathtub – ambitious, to say the least.

Then there’s Robotaxi, the autonomous ride-sharing service. Musk suggests it could be “in dozens of major cities by year-end.” Dozens! That’s a lot of cities. It reminds me of trying to predict the weather – a lot of confident forecasts, and a surprising number of umbrellas required. But here’s the thing: the stock isn’t exactly reflecting all this potential. And that, as any trader worth his salt will tell you, is a bit of a head-scratcher.

The commonly cited reason is weak financial performance. Revenue dipped 3% last year, automotive revenue down 10%. Earnings per share took a rather substantial tumble – 47%, which, let’s be honest, is not a number you want to see on any spreadsheet. But I suspect there’s something else at play, a subtler issue that might be more significant in the long run.

It’s this: Tesla may not be spending money fast enough to justify its valuation. Now, that sounds counterintuitive, doesn’t it? We’re generally told that careful spending is a virtue. But consider this: if you’re aiming to build a global network of self-driving taxis, a humanoid robot, and a refinery all at once, a little frugality can be… problematic. It’s like trying to build a cathedral with a lemonade stand budget.

Too Frugal?

Last year, Tesla spent $8.5 billion on capital expenditures. Which, in the grand scheme of things, isn’t nothing. But when you consider the company’s market capitalization – currently hovering around $1.5 trillion – it feels… modest. And it’s actually down from the previous year. It’s as if they’re trying to win a marathon by taking leisurely strolls. They’ve promised more for this year – “in excess of $20 billion.” Better, certainly. But still, when you’re talking about a company with ambitions that stretch to the stars, $20 billion feels… insufficient.

The money, it seems, will be spread thin. “Six factories,” explained Tesla’s CFO, Vaibhav Taneja, during the earnings call. “The refinery, battery cell factories, CyberCab, Semi, a new mega factory, the Optimus factory.” Optimus, of course, is the humanoid robot. Apparently, they’re also building AI infrastructure and expanding existing facilities. It’s a dizzying list. It’s like attempting to juggle chainsaws while riding a unicycle. A lot can go wrong.

“On top of it, we’ll also be spending money for building our AI compute infrastructure and we’ll continue investing in our existing factories to build more capacity. And then, you know, also the related infrastructure along with it. We’ll also further expand our fleet of robotaxi and Optimus.”

So, they’re laying the groundwork for multiple new vehicles, costly AI infrastructure, battery cell production, and a humanoid robot. No biggie. As a trader, I can’t help but wonder if they’re trying to do too much, too soon. It reminds me of the old saying: “Jack of all trades, master of none.”

My worry is that this capital will be spread too thin, or the company isn’t spending enough to capitalize on its growth opportunities effectively, or, quite possibly, both. It’s a delicate balancing act, and one that requires a level of precision that even the most seasoned trader might envy.

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Betting Against Tesla Could Be a Mistake

But before you rush to short the stock, consider this: Tesla has historically been remarkably capital-efficient. They’ve managed to achieve a lot with a relatively small amount of money. So, it’s entirely possible they can pull this off. It’s like a magician pulling a rabbit out of a hat – you know it’s a trick, but you’re still impressed.

Still, $20 billion isn’t much in the context of both the company’s staggering market capitalization and Tesla’s ambitious vision for a scaled autonomous ride-sharing fleet and an army of humanoid robots. It’s a big ask. While companies can only spend money so quickly, this doesn’t change the fact that Tesla may not be executing fast enough to justify its mind-boggling valuation.

All of this is a long way of saying that I wouldn’t be surprised if 2026 is a great year of execution for Tesla, but its current valuation may ask for more than the company can deliver. Given the company’s history of getting the most out of limited capital expenditures, I can’t rule out the possibility of Tesla proving me wrong. And as any good trader knows, it’s always best to be pleasantly surprised than unpleasantly so.

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2026-02-19 02:33