Hi YXI friends,

Today, we take a look at Tesla’s latest financials, assessing the company's fundamentals, valuation, and price technicals.

You can find the past earnings of the companies we cover in the “Asset Profile” section of YX Insights below.

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

Tesla's business spans two primary reporting segments: Automotive and Energy Generation & Storage, supplemented by Services and Other revenue.

Over time, Tesla aims to transition into a physical AI company, tapping into the enormous TAMs in Robotaxi, Humanoid Robots, and AI Compute.

Tesla reported a quarterly revenue of $22.4 billion in Q1 2026, which is the fastest growth rate in the past two years (or more).

Automotive revenue increased by 16.2% YoY, mostly driven by automotive sales (+19.7% YoY). There has been a recovery in volume growth in Europe, with growth of 150% QoQ, driven by strong sales in France and Germany. Regulatory credits fell by 36% to just 2.3% of the automotive revenue - this figure will only decline from here.

Energy revenue decreased by 11.8% YoY. The YoY comparison is very difficult after a strong 2025. With Megapack 3 deploying later this year, Energy revenue growth could continue to look ugly in the near term.

Services and Other revenue increased by 42% YoY.

Pipeline Considerations

Back in Q3 last year, Elon expected 50% of the US population to access a Robotaxi by year-end. However, it is still only active in the Bay Area, Dallas, and Houston. Optimistically, Elon could achieve this target by the 2026 year-end, with material revenue uplift in 2027. However, always take these regulatory timelines with a pinch of salt.

Similarly, Tesla predicts EU-wide approval of the FSD by Q2 and China by Q3. These are likely aggressive timelines given the safety concerns. Any approval is likely to come with initial caveats.

The unique advantage of Tesla is that it can train its FSD using its global fleet on a much wider scale than competitors like Waymo. Moreover, Tesla is significantly cheaper to produce at scale than Waymo is.

For Optimus, while there is little doubt that robotics can play a significant role in human lives (and at work) in the future, the timing of commercialisation is hugely uncertain. Investors must budget for this uncertainty, without being caught up in the early hype. Manufacturing EVs at scale is hard enough, but manufacturing robot humanoids at scale is even harder, given the high supply-chain bottlenecks.

The trailing 12-month revenue is now positive, though still close to flat.

The biggest highlight is Tesla’s gross margin. We are seeing four consecutive quarters of sequential expansion from FY25Q1's 16.3%, and now also the highest across the eight-quarter window.

However, its net margins are very low. Tesla’s R&D spending surged to $1.95 billion in Q1 2026, up 38.1% YoY from $1.41 billion. This reflects heavy investment in FSD, Optimus, and next-generation vehicle platforms.

Tesla’s EPS has been largely volatile and has not provided useful signals for us.

TSLA has produced positive free cash flows in each of its past 8 quarters. However, due to the increased CapEx guidance, Tesla is expected to post negative free cash flow for at least the next three quarters.

While 11% of revenue seems benign for Tesla’s CapEx, it is spending 63% of its operating cash flows. Moreover, CapEx is expected to ramp up significantly over the next three quarters, nearly tripling its Q1 level as a percentage of revenue.

Tesla is leaning into SBC significantly more than before, although a 16% in SBC roughly matches its revenue growth.

Here are the key financial metrics from the past four quarters. I designed the table this way so we can focus solely on the key top-line, profit, and cash flow metrics.

Here are Wall Street's forward estimates.

TSLA trades near the median valuation of its past year for both top-line and bottom-line metrics.

However, Tesla, as a stock, is hardly traded as a “value” play and is wildly expensive by traditional car company valuation metrics.

It is best to think of Tesla as a car company plus a call option for physical AI dominance across Robotaxi and Robotics. And the price swings largely depend on market sentiment about how likely or far off Elon Musk is to achieve all his stated ambitions.

Tesla is seasonally weak in February and March. The good news is that we are now at the end of April, entering a seasonally bullish period for Tesla.

Tesla is a very volatile stock, with its annualised vol at 49% this week. That’s significantly wider than the S&P 500 (around 16%).

The best time to buy TSLA is after it falls by 10%, which has a very high win rate and delivers 3-month returns.

Recently, TSLA enjoyed a 5-day up streak before earnings. Historically, TSLA has enjoyed a positive 1-month forward return of 8.5% (64% win-rate, just under two-thirds).

I am looking for a steeper retrace in TSLA to $350-360, which could create the 1-2 setup for us in a new bull trend.

Upon the setup, we could see wave 3 directly tackling the December high.

I am optimistic about Tesla's overall trajectory as a physical AI company. However, the near-term path requires patience. After calling 2025 a transition year, 2026 could be another year with major catalysts arriving only towards year-end (EU/China approvals, Robotaxis in more states).

The short-term price is likely to move in line with overall market risk sentiment and price technicals. The former has risen significantly since the ceasefire agreement, while the latter is still in a bottoming-out consolidation stage.