Tesla shares fell 14.5% following a second-quarter report that showed record revenue but significantly lower profit margins.
Tesla shares dropped nearly 15% in a single trading day after the company reported second-quarter results that highlighted a growing gap between revenue and profitability. While Tesla achieved a record revenue of $28.2 billion, beating analyst expectations by roughly $2 billion, its earnings per share came in at $0.33, well below the $0.51 predicted by experts. The decline was driven by a significant compression in profit margins and a shift toward heavy capital spending. Net margins fell to 3.7%, less than half of the company's three-year average. Additionally, capital expenditures more than doubled from the previous period, pushing free cash flow into negative territory. Management is deliberately spending heavily on future technologies, including the Optimus robot, robotaxis, and AI compute. Despite the immediate selloff, demand remains strong with record delivery numbers and a growing backlog of orders. Investors are now weighing whether the current "cash burn" is a temporary hurdle or a necessary investment for long-term growth in autonomy and robotics.