RESOLVING THE LEDGER
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It's been a rough year so far for Tesla (NASDAQ: TSLA) , and it got worse after it reported its second-quarter earnings on July 22. Although the company had record Q2 vehicle deliveries, produced record revenue, and achieved $100 billion in revenue over the past 12 months, its stock tanked after reporting earnings.
On the surface, there were a handful of encouraging things about Tesla's earnings, but the reason for its slump comes down to the $25 billion in capital expenditures (capex) the company is planning for this year. This follows a trend Wall Street has seen recently with many big tech and AI-related stocks .
A company's capex is what it spends on things such as machinery, buildings, and other infrastructure. It's a necessary expense to support growth, but sometimes, a company can take its spending too far. The $25 billion in capex that Tesla estimates for this year is much smaller than other " Magnificent Seven " companies', but it's almost triple the $8.5 billion it spent last year.
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