Tesla's Market Cap Just Slipped Below $1.5 Trillion. Here's What the Bears Get Right -- and Wrong.
Key Points
Tesla's share price underperformance in 2026 is tied to delayed robotaxi revenue, higher capital expenditures, and lower margins.
Wall Street analysts have lowered earnings and cash flow expectations for Tesla through 2028.
Despite setbacks, progress in robotaxi development could shift Tesla's narrative in a positive direction, particularly as expectations have been reset.
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Tesla (NASDAQ: TSLA) stock isn't having a great 2026 so far. It's down almost 24% this year as of the time of writing, compared to the S&P 500, which is up almost 13.8%. The underperformance is driven by a realignment of expectations throughout the year: Robotaxi revenue expectations were pushed out, capital expenditure expectations were pushed up, and near-term margin expectations were pushed down. I would invite readers to put forward any stocks that have risen given these sorts of circumstances. The bears got it right, but here's where some of them may be wrong.
Tesla's changing narrative
Expectations for earnings from robotaxi have been pushed out due to the "delayed" rollout, at the same time as management has unveiled plans to ramp capital spending to above $25 billion in 2026 and will "grow for the next two or three years" to fund Optimus production, robotaxi fleet, investments in Terafab, solar manufacturing, AI compute, and "all the other expansions we'll do for other manufacturing for automotive," according to CFO Vaibhav Taneja on the last earnings call.
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As for the margin compression in the second quarter, it largely stems from an unfavorable sales mix and rising costs, as discussed in more detail previously. Putting all of this together, if you were modeling X amount of earnings and cash flow for, say, 2027 and 2028, and the start of the year, then you would have to lower that figure to X minus Y in light of the changes this year.
For example, here's how the Wall Street analyst consensus for Tesla has changed negatively over the last three months, according to Visible Alpha.
|
Wall Street Analyst Consensus |
2026 |
2027 |
2028 |
|||
|---|---|---|---|---|---|---|
|
Metric |
3 Months Ago |
Current |
3 Months Ago |
Current |
3 Months Ago |
Current |
|
Net income |
$4.4 billion |
$3.5 billion |
$6.1 billion |
$4.5 billion |
$8.9 billion |
$7.1 billion |
|
Capital expenditures |
$24.3 billion |
$25.2 billion |
$20.9 billion |
$25.7 billion |
$21 billion |
$26.3 billion |
|
Free cash flow |
($8.4) billion |
($8.5) billion |
($4.5) billion |
($11.1) billion |
($0.4) billion |
($7.8) billion |
Data source: Visible Alpha
In a nutshell, the bears who doubted that Tesla's robotaxi rollout would meet CEO Elon Musk's previous pronouncements have been proven right. Moreover, it's worth noting that Musk's previous estimates focused on fleet size and expansion to new cities, whereas now management wants investors to think in terms of miles driven under robotaxis and the development of the next major version of full self-driving (FSD) software, v15.
Image source: Tesla.
What the bears may be missing
The developments in 2026 are disappointing, but the dip in the share price may prove a good long-term entry point, now that expectations for the robotaxi rollout have been reset. In addition, Tesla is making progress on robotaxi development. Realistically, if management has said it wouldn't go "large-scale unsupervised FSD" until v15 was in place, then that's what investors should monitor. The good news is the robotaxi fleet is already running with early, but far from complete, versions of v15.
If the architectural and safety improvements in v15 enable Tesla to scale its robotaxi fleet in 2027, the narrative around the stock will change dramatically for the better, potentially prompting upgrades to earnings expectations. In other words, don't bet against the earnings potential of Tesla's robotaxi business.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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