TLDR
- Tesla Q2 EPS came in at $0.33, missing the $0.49–$0.51 analyst estimate by $0.16–$0.18
- Revenue beat expectations at $28.24B vs. the ~$25.55–$26.32B consensus, up 26% year over year
- Free cash flow turned negative at -$1.09B, and operating margin fell to 1.4% from 4.1% a year ago
- Capital expenditures soared 142% to $5.79B; Tesla confirmed full-year capex will exceed $25B
- TSLA stock fell roughly 4–5% in after-hours and premarket trading following the report
Tesla closed Wednesday at $374.05 before sliding roughly 5% in after-hours trading to around $353 after the company posted mixed Q2 results. EPS of $0.33 missed analyst estimates of around $0.49–$0.51, while revenue of $28.24B topped the $25.55B–$26.32B consensus, up 26% from a year ago.
TESLA $TSLA Q2’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $28.24B (Est. $26.32B) 🟢; +26% YoY
🔹 Adj. EPS: $0.33 (Est. $0.51) 🔴; -18% YoY
🔹 Gross Margin: 16.8% (Est. 19.4%) 🔴; -41 bps YoY
🔹 Auto Margin ex-Credits: 16.3% (Est. 18.1%) 🔴; -310bps
🔹 Free Cash Flow: -$1.09B (Est.… pic.twitter.com/284P8n8eHF— Wall St Engine (@wallstengine) July 22, 2026
Net income dropped 5% to $1.11B, or $0.32 per share, from $1.17B a year earlier.
The revenue beat was driven by strong deliveries. Tesla reported 480,126 Q2 deliveries, up 25% year over year, well ahead of the Bloomberg consensus estimate of 397,466.
Automotive revenue hit $20.52B, up 23%. Energy revenue rose 13% to $3.14B, and services revenue jumped 50% to $4.58B.
Margins Slide as Costs Surge
Despite the top-line beat, gross margin fell to 16.8% from 17.2% a year ago. Analysts had expected 19.4%. Average selling prices dropped as Tesla leaned on lower-cost Model 3 and Y variants after retiring the Model S and X.
Operating margin collapsed to 1.4% from 4.1% a year ago, as operating expenses climbed 47% to $4.35B. The increase was driven by spending on AI, robotics, and R&D.
Free cash flow turned negative at -$1.09B, compared to $146M generated in Q2 2025 and $1.44B in Q1 2026. Capital expenditures surged 142% year over year to $5.79B. CFO Vaibhav Taneja confirmed full-year capex will exceed $25B, with CEO Elon Musk calling 2026 a “massive cap-ex year.”
The cash is going toward Optimus humanoid robot production, Cybercab ramp-up, and AI data center build-out. Tesla said Optimus production lines are being installed and will “start production soon,” with early builds used for internal training data rather than customer deployment.
On the Robotaxi front, Tesla expanded unsupervised rides to Miami, Orlando, and Tampa in July, bringing the total to seven major metro areas. Full Self-Driving active subscriptions reached 1.48 million, up 56% year over year.
Musk said Robotaxi miles driven are growing more than 10% per week, but noted safety constraints will pace the expansion.
On the delivery strength, several factors helped. The new Model Y ramp is complete. Tesla has been cutting prices globally, and buyers have responded. European registrations more than doubled in May, with Greater Europe up nearly 108%. China also provided support.
In the US, however, the expiration of the federal EV tax credit has weighed on sales, with Cox Automotive estimating US Tesla sales are down 20% due to the loss of that incentive.
Taneja told investors operating expenditures will “grow in 2026 and beyond,” with commodity prices and interest rate changes continuing to add to costs.
Musk was also asked about a potential Tesla-SpaceX merger, given growing overlap between the two companies, particularly around the Terafab project. He said combining companies requires “the appropriate process” and cannot be discussed on an earnings call.
Tesla’s TSLA stock is down about 17% for the year and off roughly 11% in July alone heading into the print.
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