Photo: X / Tesla
Tesla managed to surprise Wall Street pleasantly with its first quarter report: its earnings exceeded forecasts and its cash flow was not negative, contrary to expectations. After the publication of the results, Tesla shares soared almost 4% in extended trading. At the same time, they added less than 0.3% in the main session, while the Nasdaq and S&P 500 indices rose more than 1% each.
As reported by Tesla
- Adjusted earnings in the first quarter rose 52% to $0.41 per share. Analysts polled by Bloomberg on average expected $0.34 per share. Tesla's profit beat expectations for the second quarter in a row - the last time this happened was in 2022.
Profit growth was driven in part by higher vehicle costs, growth in vehicle deliveries and related sales (such as Full Self-Driving autopilot subscriptions) and one-time benefits related to warranties and duties, Tesla said.
- Tesla unexpectedly reported positive free cash flow of $1.44 billion. Analysts had predicted a cash outflow of nearly $1.9 billion.
- However, revenue for the first quarter was below expectations. It amounted to $22.39 billion - 16% more than a year ago. But analysts had expected revenue of $22.64 billion.
- Tesla sold 358,023 electric vehicles worldwide in the first quarter - up 6.3% from a year earlier. Despite the increase over last year's results, it was Tesla's second worst sales quarter since 2022, WSJ notes.
What's important to investors
Since its peak in December 2025, Tesla shares have lost 21%, the worst performance in the "Magnificent Seven." That said, Tesla investors are paying a high price for the stock, Bloomberg wrote shortly before the results were released. With a price-to-earnings ratio of 183x, Tesla is the most expensive stock in the S&P 500 after Warner Bros. Discovery and Boeing. By comparison, Apple's forward P/E multiple is about 30x and Alphabet's is 26x.
At the same time, Tesla's appeal as the only stock to directly bet on Elon Musk will soon begin to weaken. "The potential SpaceX IPO will put pressure on Tesla stock as retail investors who would otherwise invest in Tesla rush to SpaceX," said BNP Paribas analyst James Picariello.
To give the stock a boost, Tesla needs one of two things: either some flashy new move from Musk's arsenal that could shift the market's attention and buy time (something like a new affordable electric car project), or concrete evidence that its artificial intelligence and robotics projects justify the stock's high valuation, the agency noted.
"When investors believe in the long-term story, their patience doesn't run out overnight," says Haris Khurshid, chief investment officer at Karobaar Capital, which owns Tesla stock. - The existing investor base is holding up, but it's getting harder to attract new buyers without more obvious results."
Wall Street is already showing pessimism. Analysts have cut first-quarter earnings forecasts by more than 55% over the past 12 months and by about 30% over the past six months. In addition to falling electric car sales, the problem is that unmanned cars and Optimus humanoid robots won't be mass commercialized for years, if not decades, to come.
This article was AI-translated and verified by a human editor
