Tesla Stock Falls Over 6% After Earnings, Hitting Nearly Three-Month Low
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Tesla’s Q2 2026 earnings triggered a 6.26% pre-market decline on July 23, Eastern Time, as shares hit $350.70. Despite record revenue of $28.2 billion, operating margins plummeted to 1.4%, significantly missing the 5.4% consensus. Massive AI capital expenditures resulted in a $1.09 billion free cash flow deficit, undermining investor sentiment. Technically, breaking the $340 support level risks a 35% correction toward $220. Furthermore, analysts at Wells Fargo maintain a Sell rating with a $130 target, citing concerns over eroding EV gross margins due to intense competition and aggressive pricing strategies.
TradingKey - Tesla's profit margin tumbled and its free cash flow turned negative, triggering an investor sell-off that sent its stock down over 6%.
On July 23, Eastern Time, Tesla ( TSLA) shares extended their recent slide, tumbling 6.26% in pre-market trading to trade at $350.70, hitting a new three-month low and testing the technical support line of $340, which is also the lowest point of this year's decline.
After yesterday's close, Tesla released its Q2 2026 earnings report, showing revenue surpassing $28.2 billion to reach a record high. However, this could not mask the harsh reality of a sharp decline in profit margins and massive AI capital expenditures (CapEx) turning free cash flow negative, which once again severely damaged market confidence. Financial data showed that Tesla's Q2 operating margin was 1.4%, lower than the market consensus of 5.4%; free cash flow was -$1.09 billion, shattering market expectations of a positive figure.
If Tesla's stock price breaks below the support level around $340 in the short term, it could face a further downward correction of over 35%, with the target pointing directly back to the dense trading zone near $220. This was the low point of the 2025 decline, where the stock oscillated for more than two months.
Tesla stock price chart, Source: TradingView
However, there are even more bearish views. Among them, Wells Fargo believes Tesla's valuation is too high and that its core EV gross margin is being eroded by price cuts and competition. It rates the stock as Sell with a target price of $130, representing a downside of more than 60% from current levels.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
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