Tesla Q 2 quarterly report preview: high revenue growth expected, but analysts warn the market may not buy it
Tesla will announce its second-quarter results after the U.S. stock market closes on Wednesday, and analysts are worried that the company's stock price will experience the biggest fluctuation in a year. The options market is currently suggesting that the stock could move 5.76% after the earnings report. Analysts expect Tesla's second-quarter revenue to reach US$27.58 billion, a year-on-year increase of 22%; of which the automotive business revenue is expected to be US$20.05 billion, and the energy business will contribute US$3.77 billion. Full-year revenue in 2026 is expected to be US$105 billion. For Tesla, this forecast represents strong sales growth.
Tesla will announce its second-quarter results after the U.S. stock market closes on Wednesday, and analysts are worried that the company's stock price will experience the biggest fluctuation in a year. The options market is currently suggesting that the stock could move 5.76% after the earnings report. Analysts expect Tesla's second-quarter revenue to reach US$27.58 billion, a year-on-year increase of 22%; of which the automotive business revenue is expected to be US$20.05 billion, and the energy business will contribute US$3.77 billion. Full-year revenue in 2026 is expected to be US$105 billion. For Tesla, this forecast represents strong sales growth. According to previously announced second-quarter vehicle delivery data, Tesla delivered 480,126 vehicles in the last quarter, a year-on-year increase of 25%, far exceeding analysts’ expectations of 406,000 vehicles. This is also the strongest growth Tesla has achieved since the third quarter of 2023. Based on the published sales data, to some extent, analysts have digested the good news of Tesla's car sales rebound, and therefore have higher requirements for Tesla's second-quarter financial report. Morgan Stanley and Barclays both noted that strong performance from Tesla's automotive business will improve its near-term earnings and help fund its artificial intelligence investments, but Robotaxi, Full Self-Driving (FSD) and Optimus remain the main factors driving its stock valuation. The car business is not critical Morgan Stanley analyst Andrew Percoco emphasized in a client report last week that as Tesla doubled its capital expenditures and free cash flow turned negative, investors are increasingly concerned about whether Tesla's spending has really translated into the company's competitive advantage in the field of artificial intelligence. Wall Street expects the company's second-quarter free cash flow to fall to -$3.254 billion, according to Tesla sell-side analyst consensus estimates, as capital expenditures surge to $6.7 billion in the quarter. A year ago, Tesla's free cash flow was nearly $5.6 billion. Tesla’s valuation is currently higher than the average of S&P constituents, with its forward price-to-sales ratio (PS) as high as 13 times, while the S&P 500’s price-to-sales ratio is only 5 times, indicating that the market has paid a premium for Tesla’s artificial intelligence blueprint. In other words, investors are looking at Tesla the same way they look at artificial intelligence companies, which also means that if Tesla only announces that its auto business is back on a growth track in this earnings release, it will not be able to meet market expectations and will lead to significant fluctuations in its stock price. In addition, rumors surrounding Musk's possible merger of SpaceX and Tesla may also amplify Tesla's stock price risks. TheoTrade analyst Gianni Di Poce pointed out that Tesla's stock price has basically fluctuated in a range since the beginning of the year, with investors trying to figure out which company's stock to hold and whether SpaceX and Tesla will merge.