At the top of the year, Tesla let Wall Street know that 2026 would not be a regular year for the company.
Fresh off its second consecutive year of falling deliveries in 2025, the company and its stock were at a crossroads. So Tesla’s announcement that it was raising its capital expenditure plan to above $25 billion was a bit of a surprise.
“While this may seem substantial, and we will face negative free cash flow impacts for the remainder of the year, we believe this is the right strategic approach to position the company for its next era,” Tesla CFO Vaibhav Taneja said at the time.
Also read: Why your next car purchase will be an affordability nightmare
Tesla plans to spend the money on improving its artificial intelligence while also repurposing production lines formerly designated for the now-defunct Model S and Model X for production of Optimus, its humanoid robot.
But negative cash flow is enough to make any investor nervous, and analysts at BNP Paribas, who are already bearish on the stock, lowered their price targets on concerns about the money Tesla is spending.
BNP Paribas lowers Tesla price target
Analysts at BNP Paribas lowered Tesla’s price target to $266 per share from $268 per share this week in a note viewed by TheStreet.
Additionally, the firm lowered its 2026 sales estimate by 2%. The new forecast comes after Tesla’s third-quarter deliveries fell short of its expectations, and concerns about the company’s spending persist. The new price target represents a 30% downside from Tesla’s trading level on Monday, Oct. 12.
¨We view cash burn as a critical ‘reality check’ each qtr.,” analysts said, while noting that Tesla’s AI division has only produced 169 Cybercabs in Austin and the zero Optimus robots for sale so far. ¨Despite Tesla’s $30 billion in secured funding, we see the potential for Capex and liquidity needs to run substantially higher vs. our $27.5 billion/$29 billion forecast for 2027 and 2028.¨
Robert Alexander / Getty Images
Deutsche Bank analysts go the other way
Wall Street’s take on Tesla isn’t monolithic, with Deutsche Bank analysts recently raising their price target 11% to $420 per share from $370.59, representing an 11% increase after the company topped the bank’s own third-quarter delivery estimate by more than 5%.
The firm was particularly impressed with the company’s international performance.
“Our sense is upside came from Europe being stronger in September (e.g., France, Sweden) and China also outperforming, helped by cash discounts on in-stock cars; we think U.S. demand remained supply constrained with Model Y and Model Y L wait times running into 2027,” Yu said.
Deutsche Bank also noted that Tesla’s 3% quarter-over-quarter increase in production represented a drawdown of more than 22,000 units of inventory, which “should be a tailwind for working capital.”
However, while Deutsche Bank raised its third-quarter revenue expectations to $27.7 billion from its previous view of $27.2 billion, the firm has a 30-cent-per-share EPS expectation, well below Wall Street’s 41-cent-per-share expectation.
Still, some of its full-year expectations are bullish.
“Having cleared out a lot of inventory, 4Q deliveries should track production more closely and may be more supply-constrained, but Giga Texas is ramping Model Y L output, which should support our 485k 4Q estimate. For the full year, this implies vehicle deliveries of about 1.8m or +11% YoY,” Yu said.
But DB lowered its full-year EPS expectations to $1.40 per share from $1.48 per share while increasing its revenue expectations to $106.1 billion from $105.4 billion. This would represent a $12 billion year-over-year increase and represent an all-time record for Tesla.
Tesla looks to turn around recent trends
Tesla needs to finish the year strong to avoid a third consecutive year of declining sales.
In 2025, Tesla’s revenue fell year over year for the first time in its history as sales and margins fell. But unlike its revenue decline, the margin problem has continued into 2026.
Tesla reported second-quarter revenue of $28.2 billion, a record that topped analyst estimates of $27.6 billion. However, the 33 cents per share reported by the company missed estimates from analysts polled by Tesla (TSLA), who expected 55 cents per share.
So it seems that as Tesla chased volume, delivering 480,126 vehicles, a 25% increase from the same period a year ago, it sacrificed margins to get there. Net income for the quarter fell 17% to $1.15 billion. Analysts were expecting net income of $1.27 billion.
Meanwhile, Tesla’s results from the first quarter were flipped.
Related: Wall Street bank makes radical Tesla call after Q3 deliveries news
Tesla missed analyst revenue expectations, reporting $22.39 billion versus analysts’ $22.64 billion, but earnings of 41 cents per share topped estimates of 37 cents per share.
Despite its recent rally, Tesla shares are down more than 13% both year to date and year over year.
Tesla reports its full third quarter results after the market close on Wednesday, Oct. 21.
