Tesla's stock took a big hit last week, plunging 18% following the release of its second-quarter earnings report. The company reported an operating profit of just $400 million, far below analysts' forecasts of $1.7 billion. Although revenue increased to $28.24 billion, beating expectations, the earnings per share missed the mark at $0.33 versus the $0.50 consensus.
The disappointing profit numbers, combined with Tesla's announcement of negative free cash flow due to increased capital expenditures focused on AI investments, unsettled the market. Tesla revealed plans for a significant capex push in 2026, raising concerns about margin pressures. Meanwhile, the company has also ceased production of the Model S and Model X to repurpose manufacturing capacity for its robot product line.
Year-to-date, Tesla shares have fallen roughly 30%, turning negative over the past 12 months an unusual performance for the electric vehicle giant that hit nearly $500 per share at its 2025 peak amid AI enthusiasm. Institutional investors still control 66.2% of the stock, with notable activity from Lombard Odier Asset Management and Norges Bank.
Analysts remain cautious. JPMorgan lowered its price target to $445 while maintaining a neutral stance. Cantor Fitzgerald trimmed its target but kept an overweight rating, and Barclays nudged its price target slightly higher with an equal weight recommendation. The current average price target among 46 analysts stands at $404.95, well above Tesla's present trading levels.
In Monday premarket trading, Tesla shares edged up 1.4% to $317.50, supported by a broader market rally following easing geopolitical tensions and a nearly 5% drop in crude oil prices.
