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Tesla’s earnings look grim, but the ‘Musk Magic’ premium is still sky-high

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Are Tesla investors losing confidence in Elon Musk’s vision of the future? Or are they still inflating the company’s value based on their faith in the cofounder?

For the past several quarters after Tesla has unveiled earnings, I’ve been calculating a metric that I’ve dubbed The Musk Magic Premium. The figure estimates both the portion of the EV-maker’s valuation that’s justified by its current, baseline earnings, and the extra part based on CEO Musk’s promises for sensational products that have yet to be fully or even partially commercialized. That categories ranges from autonomous robotaxis, to full-self driving kits for retrofitting Teslas now on the road, to the manufacturer’s forthcoming humanoid “Optimus” robots.

Tesla’s Q2 report, issued after the market close on July 23, continues a series of highly disappointing quarters for the company’s EV sales, reflecting continuing weakness in China and Europe, even after a series of sharp discounts. Auto revenues dropped 16% versus Q2 of last year, and a rise in energy storage, services and other businesses failed to fill the gap, so that overall revenue declined by low-double-digit percentages. The sales headwind sent GAAP net profits down 17% to $1.17 billion—about a third what Tesla was netting per quarter in 2022.

But even the official earnings number overstates what I’ll call Tesla’s bedrock, “core” profits, defined as what it generates excluding special items that aren’t part of fundamental operations, and are unlikely contribute significantly in the years to come.

The first of the two big exclusions: Sales of regulatory credits to other carmakers that fail to meet the U.S. CAFE and other domestic and international emissions standards. The Trump administration is effectively axing the CAFE payments that have provided a huge bounty to Tesla, and Musk has acknowledged that the company’s lucrative “regulatory credits” revenue line won’t last too far into the future.

The second unusual item: unrealized profits and losses on Bitcoin holdings, currently worth around $1.4 billion. As we’ll see, the cryptocurrency careens from a positive to negative contributor depending on the quarter; the shifts in value have no impact on the cash Tesla collects and carry no tax penalty or benefit.

Tesla continues a streak of weak ‘core’ earnings

Hence, Tesla’s reported figure of $1.17 billion for Q2, though low, still overstate its current earnings power. The automaker booked regulatory credits worth an estimated $338 million after-tax, and added $284 million in paper gains from the big jump in Bitcoin prices. Subtract those two ephemeral items, and Tesla’s core earnings, by my definition, shrink to $550 million. In Q1, Tesla did even worse, making just $303 million using this metric (it took a loss on Bitcoin that I added back to get the core number). And for the past four quarters, it’s repeatable, durable profits total just $3.66 billion.

That’s a huge comedown from $12 billion registered by my measure in 2022.

So where does that result put the Musk Magic Premium? Investors disliked the Q2 results, sending Tesla’s shares reeling 8% as of market close on July 24. At that point, its market cap had dropped below the $1 trillion mark to $989 billion.

Let’s first establish what Tesla’s likely worth as a “standalone” maker and seller of cars and energy-saving equipment. Though sales are declining, we’ll award the current no-growth model the S&P 500’s generous overall PE of 29.3, an extremely high mark by historical standards. Running numbers on what it’s doing today, Tesla’s worth $107 billion. (That’s the multiple of 29.3 times trailing 12-month core earnings of $3.66 billion.)

The difference between that modest figure and Tesla’s still Brobdingnagian valuation is what’s known as Tesla’s “future growth value” or what I call the Musk Magic Premium. Today, the MMP stands at around $882 billion (today’s cap of $989 billion less a value based on what it does today of $107 billon). That’s actually slightly higher than it stood in March, when I last calculated it.

It’s intriguing that at least for today, investors are expressing a lot less confidence in Musk’s promises. Their doubts shaved no less than $89 billion from Tesla’s cap so far. Still, their faith extends well beyond anything that even the most optimistic growth estimates can reasonably explain. Say you want a 10% annual return for buying, or continuing to hold, Tesla shares over the next seven years. To deliver, Tesla’s valuation would need to double over that span, hitting nearly $2 trillion. Even if Tesla boasts a premium PE of 35 at that point, the required earnings bogey by mid-2032 reaches $55 billion a year. Ringing that bell would mandate annual profit growth of around 45%. That’s possible for a startup, but for a mature giant that’s arguably as much about metal bending as grounddbreaking technology, it sounds like the ultimate stretch.

Musk’s statements rival his most head-spinning pledges to date

On the earnings call, Musk predicted that by year end, “We’ll probably have autonomous ride hailing in probably half the population of the U.S.,” and that “the number of vehicles in operation will increase at a hyper-exponential rate.” But the most revealing part of Musk’s declaration was his cautionary interjections that because they’re so unusual, deserve close attention.

Musk acknowledged that the U.S. regulatory “tax credits are poised to go away.” He added, “We’re in this weird period where we’ll lose a lot of incentives in the U.S. We probably could have a couple of tough quarters.” He then reprised the super-promoter persona: “Once you get to autonomy at scale…certainly by the end of next, year I’d be surprised if Tesla’s economics are not very compelling.”

What? Investors need to wait to the end of 2026 to see big profits start rolling in? The farther the Musk horizon recedes, the more folks and funds will lose confidence in his fabulous vision, and the more days like today its stock will suffer. Going back to the numbers, they contained an even worse sign than the puny earnings. Tesla’s CFO stated that the company will spend over $5 billion in capital expenditures for the rest of the 2025. That’s more than what it collected in cash from operations in the first two quarters, suggesting its free cash flow could go negative. If that happens, Tesla will be spending more on expansion than it’s collecting in earnings.

The warning sign: All of these revolutionary products continue to be extremely expensive, and capital intensive, to fund. Getting the kind of returns Tesla needs will require huge returns on every new dollar it invests, along the lines of the Alphabet or Nvidia mold. Yet the heavy capital outlays keep coming. Musk heralds the promised land ahead. Investors are starting to see a fading mirage.



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Hero bystander who tackled Bondi gunman praised by Trump, Ackman

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A bystander who rushed and disarmed one of the Bondi Beach attackers has won praise from leaders around the world, including US President Donald Trump and hedge fund billionaire Bill Ackman, who announced a reward program for community heroes.

Extraordinary footage of the civilian’s actions began circulating on social media on Sunday, shortly after two men, later identified as a father and son, started shooting into a crowd gathered to celebrate the first day of Hanukkah. The massacre has left at least 16 people dead in the worst terrorist attack in Australia’s history. 

Read More: Sixteen People Killed in Bondi Beach Hanukkah Terror Attack 

In the mobile-phone video, which has not been verified by Bloomberg News, one of the attackers is standing near a tree and firing. A few meters away, a crouched man emerges from behind a parked car. He grabs the shooter from behind and wrestles the weapon from his hands. Local media named the bystander as Ahmed el Ahmed, a 43-year-old father-of-two from south Sydney. He was shot twice and is being treated in the hospital, according to reports.

He was also soon lauded for his feat. Trump said at the White House that Ahmed had saved many lives and expressed “great respect” for him. In Sydney, New South Wales Premier Chris Minns went further, describing Ahmed’s wrestle with the shooter as “the most unbelievable scene I’ve ever seen.”

“That man is a genuine hero and I’ve got no doubt there are many, many people alive tonight as a result of his bravery,” Minns said at a press conference late Sunday.

Australian Prime Minister Anthony Albanese also praised Ahmed, and other bystanders who helped treat victims in the immediate aftermath of the shooting. 

“People rushing towards danger to show the best of the Australian character,” Albanese told reporters Monday. “That’s who we are, people who stand up for our values.” 

Pershing Square Capital Management’s founder Ackman called Ahmed  “a brave hero” and said his hedge fund firm would establish a reward program for people who had carried out similar acts.

The top donor to a gofundme page set up for the “hero” who tackled the shooter is listed as William Ackman, who gave $99,999. More than $170,000 has been raised so far. 

Salesforce Inc. Founder and Chief Executive Officer Marc Benioff also expressed his gratitude for Ahmed in a post on X.



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A ‘new era’ in the housing market is about to begin as affordability finally improves

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Next year should mark a shift in the housing market after years of largely being frozen in place, according to Mike Simonsen, chief economist at top residential real estate brokerage Compass.

Home sales flatlined amid unaffordable conditions after rising demand collided with tepid supply growth, pushing up home prices. Would-be buyers became so discouraged that demand cooled and remains slow.

Prices are now becoming more favorable for house hunters, a trend that should continue in 2026 and change the narrative in the housing market.

“In the next era, that story flips. So sales are starting to move higher, but prices are capped or maybe down. Incomes are rising faster than prices, and so affordability improves for the first time in a bunch of years,” Simonsen told CNBC on Friday. “It’s not a dramatic improvement, but it’s the start of the new era.” 

His view echoes a recent report from Redfin, which also cited stronger income and weaker homes prices as it predicted a “Great Housing Reset” in 2026.

In addition to potential buyers giving up on finding an affordable home, sellers have been giving up on finding someone willing to buy at the price they want.

As a result, the number of homes that were withdrawn from the market jumped this year. In June, these so-called delistings shot up 47% from a year earlier.

Simonsen said listing withdrawals tend to be owner-occupied homes, meaning they could be latent demand as well as supply. That’s because two transactions would be needed: owners want to buy a new home but must sell their current one.

“In an environment where conditions improve a little bit, we actually estimate that that’s a representation of shadow demand—people that want to move, people that have delayed moves for maybe four years now,” he said, adding that there are about 150,000 such homeowners.

His housing market outlook for a new era of improving affordability doesn’t depend on a steep drop in mortgage rates. In fact, a plunge might spur so much demand that prices would overheat.

Simonsen expects rates to stay in the low-6% range, allowing sales to grow while also keeping home prices in check as more inventory comes on the market.

The price environment is already showing auspicious signs for prospective buyers. More than half of U.S. homes have dropped in value over the last year, but homeowners can still sell with a net gain as values are up a median 67% since their home’s last sale, accordion to data from Zillow.

And a separate report fromZillow found that homebuyers are getting record-high discounts. While the typical individual discount remains $10,000, desperate sellers are increasingly offering multiple reductions as muted demand leaves homes on the market for longer. As a result, the cumulative price cut in October hit $25,000.

“Most homeowners have seen their home values soar over the past several years, which gives them the flexibility for a price cut or two while still walking away with a profit,” Zillow Senior Economist Kara Ng said in a statement last month. “These discounts are bringing more listings in line with buyers’ budgets, and helping fuel the most active fall housing market in three years. Patient buyers are reaping the rewards as the market continues to rebalance.”



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Attacker who killed US troops in Syria was a recent recruit to security forces

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A man who carried out an attack in Syria that killed three U.S. citizens had joined Syria’s internal security forces as a base security guard two months earlier and was recently reassigned amid suspicions that he might be affiliated with the Islamic State group, a Syrian official told The Associated Press Sunday.

The attack Saturday in the Syrian desert near the historic city of Palmyra killed two U.S. service members and one American civilian and wounded three others. It also wounded three members of the Syrian security forces who clashed with the gunman, interior ministry spokesperson Nour al-Din al-Baba said.

Al-Baba said that Syria’s new authorities had faced shortages in security personnel and had to recruit rapidly after the unexpected success of a rebel offensive last year that intended to capture the northern city of Aleppo but ended up overthrowing the government of former President Bashar Assad.

“We were shocked that in 11 days we took all of Syria and that put a huge responsibility in front of us from the security and administration sides,” he said.

The attacker was among 5,000 members who recently joined a new division in the internal security forces formed in the desert region known as the Badiya, one of the places where remnants of the Islamic State extremist group have remained active.

Attacker had raised suspicions

Al-Baba said the internal security forces’ leadership had recently become suspicious that there was an infiltrator leaking information to IS and began evaluating all members in the Badiya area.

The probe raised suspicions last week about the man who later carried out the attack, but officials decided to continue monitoring him for a few days to try to determine if he was an active member of IS and to identify the network he was communicating with if so, al-Baba said. He did not name the attacker.

At the same time, as a “precautionary measure,” he said, the man was reassigned to guard equipment at the base at a location where he would be farther from the leadership and from any patrols by U.S.-led coalition forces.

On Saturday, the man stormed a meeting between U.S. and Syrian security officials who were having lunch together and opened fire after clashing with Syrian guards, al-Baba said. The attacker was shot and killed at the scene.

Al-Baba acknowledged that the incident was “a major security breach” but said that in the year since Assad’s fall “there have been many more successes than failures” by security forces.

In the wake of the shooting, he said, the Syrian army and internal security forces “launched wide-ranging sweeps of the Badiya region” and broke up a number of alleged IS cells. The interior ministry said in a statement later that five suspects were arrested in the city of Palmyra.

A delicate partnership

The incident comes at a delicate time as the U.S. military is expanding its cooperation with Syrian security forces.

The U.S. has had forces on the ground in Syria for over a decade, with a stated mission of fighting IS, with about 900 troops present there today.

Before Assad’s ouster, Washington had no diplomatic relations with Damascus and the U.S. military did not work directly with the Syrian army. Its main partner at the time was the Kurdish-led Syrian Democratic Forces in the country’s northeast.

That has changed over the past year. Ties have warmed between the administrations of U.S. President Donald Trump and Syrian interim President Ahmad al-Sharaa, the former leader of an Islamist insurgent group Hayat Tahrir al-Sham that used to be listed by Washington as a terrorist organization.

In November, al-Sharaa became the first Syrian president to visit Washington since the country’s independence in 1946. During his visit, Syria announced its entry into the global coalition against the Islamic State, joining 89 other countries that have committed to combating the group.

U.S. officials have vowed retaliation against IS for the attack but have not publicly commented on the fact that the shooter was a member of the Syrian security forces.

Critics of the new Syrian authorities have pointed to Saturday’s attack as evidence that the security forces are deeply infiltrated by IS and are an unreliable partner.

Mouaz Moustafa, executive director of the Syrian Emergency Task Force, an advocacy group that seeks to build closer relations between Washington and Damascus, said that is unfair.

Despite both having Islamist roots, HTS and IS were enemies and often clashed over the past decade.

Among former members of HTS and allied groups, Moustafa, said, “It’s a fact that even those who carry the most fundamentalist of beliefs, the most conservative within the fighters, have a vehement hatred of ISIS.”

“The coalition between the United States and Syria is the most important partnership in the global fight against ISIS because only Syria has the expertise and experience to deal with this,” he said.

Later Sunday, Syria’s state-run news agency SANA reported that four members of the internal security forces were killed and a fifth was wounded after gunmen opened fire on them in the city of Maarat al-Numan in Idlib province.

It was not immediately clear who the gunmen were or whether the attack was linked to the Saturday’s shooting.



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