Tesla shares have dropped 27.21% in 2026 even as the S&P 500 gained 13.11%, after a second-quarter earnings report that missed profit estimates by 38.51%. Wedbush analyst Dan Ives still holds a $600 price target on the stock, while Polymarket traders put the average August landing spot at $315.72 and give Optimus only 14.5% odds of a commercial release by year-end.
Tesla trades at $327.35, down 27.21% year to date and 16.80% over the past month, while the S&P 500 is up 13.11% over the same period. That gap has opened even as Wall Street's average price target on the stock implies further upside.
Q2 earnings compressed margins
Tesla's second-quarter results showed the strain behind the stock's 2026 decline. Non-GAAP earnings per share of $0.33 missed the $0.5367 consensus by 38.51%. Meanwhile, revenue of $28.24 billion beat estimates by 7.10% on 25.52% growth.
Operating margin compressed to 1.4% as operating expenses surged 47% to $4.35 billion, driven by AI infrastructure spending, research and development, and stock-based compensation tied to Elon Musk's 2025 CEO performance award. Free cash flow flipped to negative $1.09 billion, an 847.95% reversal, as capital expenditure climbed 141.81% to $5.79 billion.
Shares fell 17.5% the day after the filing while the S&P 500 gained 4.5%. Record deliveries of 480,126 vehicles and 13.5 GWh of energy storage were overshadowed by a $25 billion capital plan investors are no longer willing to underwrite on faith.
Why Ives and the bulls are doubling down
Wedbush's Dan Ives holds a $600 price target on Tesla, roughly 83% upside from current levels. His thesis rests on an AI and autonomous mobility re-rating, high-margin recurring revenue from FSD subscriptions, Optimus humanoid mass production, and vertically integrated compute and battery capex of roughly $20 billion annually.
FSD active subscriptions reached 1.48 million, up 56% year over year, with attach rates above 55% of new North American deliveries. Robotaxi has logged more than 380,000 miles of unsupervised driving across six cities, with weekly mileage growth Musk pegged at "more than 10% a week". Cybercab production has started at Gigafactory Texas, and Optimus lines are being installed at Fremont.
Prediction markets disagree. Polymarket puts the average August 2026 landing spot for Tesla at $315.72, and traders assign only 14.5% odds to Optimus reaching commercial release by year-end. Tesla carries 23 Buy, 18 Hold, and 6 Sell ratings, with recent revisions skewing toward reiterations rather than downgrades after the Q2 miss.
The EV peer group is splintered
General Motors has done the opposite of Tesla. Shares trade at $88.31, up 9.09% year to date, against a consensus target of $101.41, after the automaker beat and raised full-year guidance to $12.00 to $14.00 adjusted EPS.
Rivian trades at $15.76, down 20.04% year to date, against a consensus target of roughly $18.86. Lucid sits at $7.78 after a 26.4% year-to-date decline, with a consensus target near $9.56 and ratings that skew Hold on a new CEO's turnaround plan and widening cash burn. Tesla still carries the largest consensus-implied upside among the group at 21.5%, against a stock priced at a P/E of 295.
Tesla holds $43.5 billion in cash to fund that bet. Whether it pays off depends on robotaxi unit economics scaling before the Optimus and Terafab budgets swamp free cash flow.
Source: 24/7 Wall St.
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