Tesla (TSLA) stock remained under pressure following its first-quarter earnings report. While the company reported a beat that initially sent the stock toward $407, the rally quickly reversed as investors shifted focus from the headline numbers to rising costs and demand signals.
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Trade TSLA with leverageFor Q1, Tesla reported adjusted earnings of $0.41 per share, beating the analyst consensus of $0.36. Revenue rose to $22.39 billion, a 16% year-over-year increase, also surpassing the $22.28 billion expectation.
Inventory Build and Margins in Focus
Even with the solid results, investors didn’t ignore some weak spots. Tesla produced about 50,000 more vehicles than it delivered during the quarter, pointing to a growing gap between supply and demand. That has raised concerns that demand may be slowing, especially as the global EV market cools.
At the same time, margins held up better than expected. Automotive gross margin, excluding credits, rose to 19.2%, helped by lower raw material costs and some one-off benefits.
Spending Plans and Hardware Shift Add Pressure
The biggest concern came from Tesla’s spending outlook. CFO Vaibhav Taneja said capital expenditures will exceed $25 billion in 2026, with most of the money going toward the “Terafab” AI chip facility in Texas and the rollout of Optimus robots. He also warned that this level of investment could push free cash flow into negative territory for the rest of the year.
At the same time, another issue is starting to surface. Tesla CEO Elon Musk said older Hardware 3 systems don’t have enough capacity to support fully autonomous driving. As a result, Tesla may need to offer discounted upgrades or replacements, which could add to both costs and operational complexity.
Is TSLA Stock a Buy?
Tesla’s stock has a consensus Hold rating among 30 Wall Street analysts. That rating is based on 13 Buy, 11 Hold, and six Sell recommendations issued in the last three months. The average TSLA price target of $411.39 implies 6% upside from current levels.
