Overview
- Tesla reported record second-quarter revenue and 480,126 vehicle deliveries after Tuesday’s earnings, but adjusted earnings per share of $0.33 and a sharp fall in operating income triggered the selloff.
- Automotive gross margins fell once regulatory credits were stripped out and operating margin compressed to about 1–1.4 percent, while free cash flow swung negative driven by capital spending that management said will exceed $25 billion this year.
- The stock dropped roughly mid‑teens to high‑teens percent in the days after the report as markets repriced the company to reflect heavy, multiyear spending on AI infrastructure, a robotaxi service and the Optimus program.
- Analysts trimmed price targets but largely kept buy or overweight ratings, leaving an average target materially above the post‑earnings price, and peer results from General Motors highlighted a widening margin gap.
- Near‑term catalysts to watch are whether automotive margins and free cash flow recover, management’s capex pacing over the next two to three years, and a reported early‑August SpaceX insider lockup expiry that market coverage says could add strategic uncertainty.