Tesla delivered a record 480,126 vehicles in a single quarter, expanded Robotaxi to seven U.S. metros, and grew active FSD subscriptions to 1.48 million, up 56% year-over-year, even as its stock trades at $357.24, down 20.56% year-to-date. The core problem is margin compression: operating margin collapsed to 1.4% in the second quarter, operating income fell 56.88% year-over-year, and free cash flow swung to negative $1.092 billion as capital expenditure surged 141.81%. Wall Street's consensus price target sits at $390.09, with 6 Strong Buys, 16 Buys, 19 Holds, 3 Sells, and 2 Strong Sells, while the article's own model base case is $389.65, a bull case of $465.72, and a bear case of $351.99. Reaching $550 by 2027 would require a 54% gain and a forward price-to-earnings ratio near 234x, hinging on Robotaxi scaling beyond the current seven cities, FSD attach rates climbing past the current 55% of new North American deliveries, and tangible Optimus manufacturing progress. The primary risk is that capital expenditure expected to exceed $25 billion this year could suppress earnings longer than bulls expect.
Tesla IncOperating margin collapsed to 1.4%, operating income fell 56.88%, and free cash flow swung negative on capex up 141.81%.
