Shares of Tesla (NASDAQ:TSLA | TSLA Price Prediction) are down 10% Thursday morning to $336.28 after the electric-vehicle maker’s Q2 2026 earnings landed with a sharp profit miss. Fellow EV names are lower too, with Rivian (NASDAQ:RIVN) stock down 1% to $16.93 and Lucid Group (NASDAQ:LCID) stock down 2% to $6.65.
The broader tape is soft as well, with the NASDAQ 100 lower by 1.39%. Tesla stock had already been under pressure, sitting down 17% year to date (YTD) heading into the print.
Profit Miss Overshadows Record Deliveries
Tesla reported adjusted EPS of $0.33, missing the $0.50 consensus. Adjusted EBITDA of $3.2 billion came up short of the $4 billion expected. Revenue of $28.24 billion was a beat for Tesla, rising 26% year over year (YoY) on a record Q2 delivery haul of 480,126 vehicles.
Tesla’s operating income collapsed 57% YoY to $398 million, with the operating margin compressing to 1%. Free cash flow swung to negative $1.09 billion, a burn, but this was meaningfully better than the negative $3.64 billion the Street had feared.
Tesla CEO Elon Musk called 2026 a “massive capex year,” and CFO Vaibhav Taneja confirmed the full-year capital budget at “more than $25 billion.” Tesla’s Robotaxi service now spans seven metro areas, and active FSD subscriptions reached 1.48 million, up 56%.
Analysts Trim Targets but Hold Ratings
Wall Street responded with a coordinated target trim while ratings held, a “show-me” stance around Tesla’s AI and robotics pivot. Canaccord lowered its Tesla stock price target to $410 from $450 with a Buy, citing stagnant margins and breakthrough promises on hard-to-model timelines.
Cantor Fitzgerald trimmed its TSLA stock price target to $485 from $510 and kept Overweight, framing FY2026 as transformational for autonomy, AI, robotics, and chips. JPMorgan cut its Tesla stock target to $445 from $475, staying Neutral, and flagged softer gross margins from lower regulatory credits, rising interest-rate subvention costs, and warranty headwinds.
Meanwhile, Morgan Stanley moved its Tesla stock price target to $400 from $417, holding Equal Weight, and described the accelerating capex as “a necessary investment” to secure autonomy and robotics leadership, even as it pushes Tesla’s free cash flow further negative.
EV Peers and the DRIV ETF Feel the Ripple
Rivian shares and Lucid shares are slipping in mild sympathy on Tesla contagion rather than company-specific news. The Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) is under pressure given Tesla’s outsized weight; the fund is a narrow, volatile thematic vehicle with meaningful concentration in a handful of EV and autonomy names.
On merger chatter, Musk stated that there is “overlap” between Tesla and SpaceX (NASDAQ:SPCX) but said, “[W]e can’t talk about combining companies on an earnings call. It’s got to be done with the appropriate process.” Traders can treat that as speculation, not a plan.
What to Watch Now
Tesla remains a high-expectations, richly valued name whose bull case rests on autonomy, robotaxi, and Optimus milestones that are hard to time. Cox Automotive sees U.S. EV sales down 20% after the federal EV tax credit expired, a headwind partially offset by strong Europe demand.
Investors can watch for whether Tesla stock holds $340 into the close and whether follow-on analyst notes shift the tone through the session. Given the volatility around this AI and robotics transition, investors should consider keeping their position sizes modest as the narrative moves from deliveries to autonomy execution.
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