Tesla (TSLA) Stock Slides 6% on Increased Capital Expenditure Despite Strong Q1 Earnings

Key Highlights

• On Friday, DZ Bank raised Tesla stock from Sell to Hold, setting a $385 price target.
• Shares declined 6.1% this week and have fallen 17% year to date, dropping in 11 of the last 13 weeks.
• First quarter 2026 results exceeded projections, but the company increased capital expenditure forecast to $25 billion from $20 billion for AI initiatives.
• CEO Elon Musk announced Cybercab manufacturing has commenced, with robotaxi service expansion to additional U.S. markets planned for the first half of 2026.
• The company indicated significant robotaxi revenue is not anticipated before 2027.

Tesla has experienced a challenging week in the markets. Following its Q1 2026 financial results, shares dropped 3.6% on Thursday, bringing the weekly decline to 6.1% heading into the final trading session.

Tesla, Inc., TSLA

The sole positive development on Friday came from DZ Bank, which upgraded the stock from Sell to Hold and established a $385 price target. While this represents a modest endorsement, it had minimal impact — the consensus analyst price target currently stands at $406, down approximately $7 following the earnings announcement.

Although Tesla surpassed earnings forecasts, investor sentiment remained subdued. The electric vehicle manufacturer increased its annual capital expenditure projection to $25 billion, up from the earlier $20 billion estimate. These funds will support AI infrastructure development, encompassing self-driving technology and humanoid robotics — both areas currently producing minimal revenue.

Shares were hovering near $376 in early Friday trading, showing a marginal gain of less than 1%.

Robotaxi Manufacturing Begins

Perhaps the week’s most significant announcement came directly from Elon Musk. The CEO revealed on X that the company has initiated Cybercab production, its highly anticipated autonomous taxi vehicle.

The Cybercab features a two-passenger, two-door configuration without a traditional steering wheel or pedals. This unconventional design requires regulatory approval for widespread deployment across the United States, which Tesla has not yet obtained.

The electric vehicle maker has been methodically expanding its robotaxi network. Following the Austin launch last year, the service debuted in Dallas and Houston this month. Plans call for additional expansion to Phoenix, Miami, Orlando, Tampa, and Las Vegas during the first six months of 2026.

Despite this production milestone, Tesla stock showed minimal response. Shares ticked up marginally in premarket activity before reverting to typical Friday trading patterns.

First Quarter 2026 Financial Performance

The company posted Q1 2026 revenue of $22.39 billion. Net income attributable to common shareholders reached $477 million. Adjusted earnings per share totaled $0.41, while free cash flow generated $1.44 billion.

Vehicle deliveries for the quarter reached 358,023 units. Capital expenditures for the three-month period alone hit $2.49 billion.

Nationwide all-electric vehicle sales plummeted 27% year-over-year in the first quarter, following the September 2025 expiration of the federal $7,500 EV tax credit.

Tesla’s stock has declined in 11 of the previous 13 weeks, shedding approximately 16% during that timeframe. Year-to-date losses stand at roughly 17%.

Wall Street analysts remain divided on the stock. Just 44% of analysts covering Tesla assign it a Buy rating, trailing the S&P 500 average of 55-60%. Meanwhile, 13% rate it a Sell, nearly twice the benchmark’s approximately 7% average.

Musk has previously indicated the Cybercab will carry a lower price point than current Tesla offerings. Official pricing details have not been disclosed.

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