Tesla's stock plunged nearly 18% last week, closing at $313.03, marking its worst weekly performance since 2022. The sharp decline wiped out the $350 support level, with technical charts now suggesting $296 as the next downside target.
Key Earnings and Market Reaction
The company's second-quarter revenue hit $28.24 billion, a 26% increase year-over-year and above expectations. However, adjusted earnings per share came in at $0.33, falling short of the $0.51 consensus. Operating margins dropped to just 1.4%, while capital expenditures soared 142% to $5.79 billion, driven by investments in artificial intelligence projects, Optimus robots, and robotaxi production. This heavy spending pushed free cash flow into negative territory for the first time since early 2024.
Wall Street's response was mixed. Wedbush Securities’ Dan Ives described the surge in capital spending as a timing issue amid a broader AI arms race, noting that Tesla is only 15% into this phase. Meanwhile, other analysts remain divided on whether the AI narrative justifies Tesla’s valuation despite shrinking margins.
Technical Breakdown and Price Targets
The weekly chart reveals a significant breakdown. Last week’s 17.81% drop pierced the $350 support zone, which had held since September 2025 and now acts as resistance. Tesla’s price currently rests on a long-term ascending trendline from 2024 lows, a key line governing the stock’s upward momentum. A weekly close beneath this line would represent a major structural break, not just a temporary correction.
On the daily chart, Tesla has traded inside a descending channel since May, moving between defined boundaries for nearly three months. Following the earnings announcement, the stock broke below the channel’s lower boundary and the $350 zone with high volume the strongest in months indicating strong selling pressure rather than a brief dip.
This breakdown points to a target near $296, about 5% below Friday’s close and just under the weekly trendline, making the $296 to $310 range critical in the near term. Should selling pressure continue below $296, the stock could head toward the next support zone around $260, which has triggered strong reversals in previous years.
