Tesla plunges 15% as Q2 earnings miss, cash burn hits $1.1B

Tesla reported Q2 adjusted EPS of $0.33, missing the $0.55 consensus, as record revenue failed to offset surging AI spending.

"The quarter burned cash for the first time in two years, and Musk walked back timelines on three flagship programs," Morgan Stanley analysts said in a note, lowering their price target to $400 from $417.

Revenue rose 26% year over year to $28.2 billion, helped by 480,126 vehicle deliveries — the company's best second quarter. Automotive gross margin slipped only modestly to 16.9%. But operating income fell 57% to $398 million, squeezing the operating margin to 1.4% from 4.1% a year earlier. Regulatory credit revenue, a high-margin contributor in prior quarters, collapsed 67% to $146 million. Capital expenditures more than doubled to $5.8 billion, pushing free cash flow to negative $1.1 billion — the first deficit since early 2024.

The selloff erased $215 billion in market value, with shares closing at $319.69, near the bottom of a 52-week range from $297.82 to $498.83. The average analyst price target of $412 implies about 29% upside, though that gap reflects long-term bets on autonomous driving and robotics rather than the business Tesla runs today. On the earnings call, Musk walked back earlier guidance on the Robotaxi ride-hailing service, Optimus humanoid robots and the electric semi truck — programs he had previously described as imminent. CFO Vaibhav Taneja affirmed plans to spend more than $25 billion on CapEx this year, up from $8.5 billion in 2025, with further increases expected as Tesla expands its Robotaxi fleet, scales Optimus production and builds its own chip fabrication facility.

The decline puts Tesla stock at its lowest since mid-2025, testing support near $300. Investors will watch the next delivery report and any updated Robotaxi expansion timeline for signs that spending is translating into revenue.

This article is for informational purposes only and does not constitute investment advice.