Tesla stock falls 14% after second-quarter earnings miss by 38%; Elon Musk is not worried — here's what TSLA investors should make of that.
Elon MuskTesla, Inc.

Tesla stock falls 14% after second-quarter earnings miss by 38%; Elon Musk is not worried — here's what TSLA investors should make of that.

Tesla's stock plummeted 14% after the company reported second-quarter earnings that missed analyst expectations by 38%, with non-GAAP EPS at $0.33 versus the $0.53 estimate. Despite this, CEO Elon Musk remains optimistic about future growth driven by AI and new vehicle production.

Barchart.com27 July 2026 · 04:18 UTC
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Tesla's second-quarter earnings report revealed a significant miss on earnings expectations, with non-GAAP EPS at $0.33, falling short of the $0.53 forecast by analysts.

This disappointing performance led to a 14% drop in stock price during after-hours trading.1

Despite the earnings miss, vehicle deliveries reached a record 480,126 units, a 25% increase year-over-year, surpassing analyst expectations of approximately 406,600.2

However, the company faced challenges as operating income collapsed 57% year-over-year to $398 million, with operating margins narrowing sharply to 1.4% from 4.1% a year ago.

Operating expenses surged by 47% to $4.35 billion, driven by increased spending on AI, Optimus, and Robotaxi infrastructure.

Additionally, free cash flow turned negative at -$1.1 billion, with capital expenditures soaring 142% year-over-year to $5.8 billion.

CEO Elon Musk remains optimistic, describing 2026 as a "massive" capex year that will yield "incredible" returns. He emphasized strong FSD adoption and a Robotaxi rollout that is scaling more than 10% per week in miles driven.

Tesla has also confirmed that Cybercab production has begun at Gigafactory Texas, with Robotaxi now operating in seven major metropolitan areas. Musk noted that volume production of Cybercab, a fully driverless vehicle, is underway, while framing Optimus as one of Tesla's largest projects, cautioning that the manufacturing ramp will follow a flat and prolonged S-curve due to the new supply chain being built.5

The mean price target of $409.03 suggests a potential upside of 31%, indicating that the market may be underpricing Tesla's future projects.7

Key Insight
“Vehicle deliveries hit a record 480,126 units in Q2, up 25% year-over-year, far surpassing analyst estimates of about 406,600. CEO Elon Musk said 2026 will be a 'massive' capex year and confirmed Cybercab production has begun at Gigafactory Texas with Robotaxi now operating across seven metro areas.”
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1
Barchart.com
“Non-GAAP EPS, however, came in at $0.33, badly missing the $0.53 analyst estimate and sending shares lower in after-hours trading.”
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