Tesla (NASDAQ: TSLA) shares plunged roughly 15% on Thursday after the electric vehicle maker reported a steep decline in second-quarter profitability.
The stock closed at $319.69, landing near the lower end of its 52-week range, which runs from $297.82 to $498.83.
Despite the sharp selloff, the average analyst price target on Tesla sits near $412, implying approximately 29% upside from Thursday’s close.
Across the 44 analysts currently covering the company, the consensus rating remains a buy, signaling that Wall Street has not dramatically shifted its long-term view.
Tesla’s second-quarter revenue rose 26% year over year to $28.2 billion, supported by 480,126 vehicle deliveries, which the company described as its best second quarter ever.
That revenue growth accelerated from 16% in the first quarter and pushed Tesla past $100 billion in trailing-12-month revenue for the first time in its history.
However, operating income fell 57% year over year to $398 million, squeezing the operating margin to just 1.4% from 4.1% a year earlier.
Adjusted earnings per share came in at $0.33, down 18% from the same period last year, leaving barely a cent of operating profit for every dollar of record revenue generated.
Regulatory credit revenue, which has historically provided a high-margin boost, collapsed 67% to $146 million during the quarter.
Capital expenditures more than doubled to $5.8 billion, tipping free cash flow into negative territory at negative $1.1 billion, marking the first time in years that the quarter burned cash.
The spending surge reflects Tesla’s heavy investment in artificial intelligence, its robotaxi service, and its Optimus robot program, alongside stock-based compensation tied to CEO Elon Musk’s 2025 pay award.
Tesla’s automotive gross margin slipped only modestly to 16.9%, suggesting the core car business remained relatively stable despite the headline profit collapse.
Services and other revenue climbed 50% year over year, and energy storage deployments rose 41% to 13.5 gigawatt-hours, offering some evidence that newer business lines are gaining traction.
Even after Thursday’s dramatic decline, Tesla still trades at approximately 300 times earnings, a valuation that reflects enormous expectations for future growth rather than near-term financial performance.
Analysts maintaining bullish price targets are, on average, still crediting Tesla for a future built on high-margin software, a scaled robotaxi network, and eventual strong returns from its AI investments.
The 29% gap between the current price and the average target arguably measures faith in that long-term future more than it reflects a discount on Tesla’s present-day business.
As one analysis noted, price targets tend to get updated on a delay after a move of this size, meaning the average target could drift lower toward the stock price rather than the stock rising to close the gap.
What would meaningfully change the investment calculus is profit growth appearing alongside the strong revenue growth Tesla has recently demonstrated.
