NEW YORK, July 24, 2026, 16:08 (EDT)
- Shares declined nearly 19% during the week, marking the largest drop since March 2020.
- Capital expenditures in the second quarter totaled 123% of operating cash flow, up from 94% in the same period a year ago.
- Four major technology companies with large market capitalizations are scheduled to release earnings next week, further assessing AI-related expenditures.
U.S. cash markets wrapped up trading on Friday following Tesla NASDAQ:TSLA shedding a record $214.5 billion in market capitalization on Thursday. The stock lost roughly 19% over the week.
The decline came after a steep drop in cash conversion. Tesla allocated $1.23 to capital expenditures for each dollar of operating cash.
The figure stood at 94 cents a year ago. Free cash flow turned negative at $1.09 billion. This marked Tesla’s first quarterly cash outflow in over two years.
| Tesla Q2 metric | 2025 | 2026 | Change |
|---|---|---|---|
| Revenue | $22.50 billion | $28.24 billion | +26% |
| Operating cash flow | $2.54 billion | $4.70 billion | +85% |
| Capital expenditures | $2.39 billion | $5.79 billion | +142% |
| Capex as % of operating cash flow | 94% | 123% | +29 percentage points |
| Free cash flow | $0.15 billion | -$1.09 billion | -$1.24 billion |
Tesla’s second-quarter financials provided the figures. The ratios and changes in dollar amounts were derived from these published numbers.
Revenue increased by 26%, yet expenses climbed at a higher rate. The operating margin declined to 1.4% compared to 4.1%.
Adjusted earnings reached 33 cents per share. Analysts polled by Reuters had anticipated 51 cents, based on consensus figures.
Key vehicle margins slipped as well. The average revenue per vehicle declined to $42,730, down from $45,345. Revenue from regulatory credits dropped by nearly two-thirds to $146 million.
Expenditures are set to remain elevated. Tesla is targeting capital spending above $25 billion in 2026. Chief Executive Elon Musk described the year as a “massive capex year.” Reuters
The capital supports robotaxi development, AI infrastructure, and humanoid robotics. Subscriptions for Active Full Self-Driving increased by 56% to reach 1.48 million.
“Monetization is still the main issue after the earnings shortfall,” said Direxion analyst Ryan Lee. “It remains to be seen how soon those investments will help drive the valuation.” Reuters
The gap in scale was stark. On Friday, the combined market value of Lucid Group NASDAQ:LCID and Rivian Automotive NASDAQ:RIVN stood at roughly $25 billion. In comparison, Tesla shed more than eight times that figure during a single trading session.
Shares of all three companies declined again on Friday. Rivian dropped nearly 4%, and Tesla along with Lucid each slipped around 3%.
The one-month view continued to benefit the smaller players. As of Friday afternoon, Lucid shares had risen 21%, and Rivian had gained 9%. Tesla shares were down roughly 18%.
Lucid’s rise follows a sharp drop of up to 57% in its shares earlier in July after a false bankruptcy report. Lucid described the report as “completely false,” stating its liquidity would last well into next year. Reuters
The short-term trade could be less skewed now. According to a CNBC market article, the bearish bet on Tesla had already realized much of its anticipated move. The article then highlighted a different momentum stock.
Focus moves to upcoming earnings releases. Meta Platforms NASDAQ:META and Microsoft NASDAQ:MSFT are due to report Wednesday, July 29. Apple NASDAQ:AAPL, Amazon.com NASDAQ:AMZN and Rivian will follow with releases Thursday, July 30.
The upcoming results will reveal if cash flow can match AI spending. The Magnificent Seven represent over 30% of the S&P 500.
Risks: Tesla maintained $43.5 billion in cash and short-term investments. Accelerated software income or reduced capital expenditures might revive free cash flow. Additional price reductions or any postponement of the robotaxi launch would put more pressure on finances.
Related articles: NASDAQ:TSLA
