Tesla second quarter 2026 earnings explained: segments, EPS and valuation multiples

Tesla reported its second quarter 2026 results on July 22, 2026. It has since reported its third quarter, on October 21, 2026, and a separate Dalsna Finance article covers those results. This article looks back at the three months ended June 30, 2026 and compares them with the first quarter. Revenue rose 26.1% to $28,236 million and GAAP net income more than doubled to $1,114 million, helped by a gain on Tesla's stake in SpaceX, while operating income fell (Dalsna Finance calculation for the changes). Every figure is sourced and dated, and every number worked out by us is labelled as a Dalsna Finance calculation. ^[1][2]

Tesla in brief

Tesla, Inc. is best known for its electric cars, and it also sells energy storage through its Megapack and Powerwall products. Its shares trade on the Nasdaq Global Select Market under the ticker TSLA. In the second quarter it delivered 480,126 vehicles, a record for any second quarter. It produced 451,758. It deployed 13.5 GWh of energy storage, up from 8.8 GWh in the first quarter. Tesla said its revenue over the trailing twelve months passed $100 billion for the first time. ^[1][3]

The quarter also moved its newer projects along, as Tesla described them. Cybercab, a vehicle built for its Robotaxi fleet, began production at Gigafactory Texas. Tesla took out the Model S and Model X lines at its Fremont factory to install the first lines for Optimus, its humanoid robot. By the time of the update the Robotaxi service was live in seven major US metro areas, including three in Florida that started unsupervised rides in July, with a safety driver in the San Francisco Bay Area. Active FSD (Supervised) subscriptions reached 1.48 million from 1.28 million. By Tesla's count they include upfront purchases as well as monthly subscriptions and leave out free trials, and Tesla notes the software needs active driver supervision. ^[1]

Two segments, three revenue lines

Tesla reports two segments: automotive, and energy generation and storage. Its income statement splits revenue three ways. Automotive revenue is car sales plus regulatory credits and vehicle leasing. Services and other is the third line, and the quarterly report counts it inside the automotive segment. Energy generation and storage covers products such as Megapack and Powerwall. ^[3][1]

Automotive revenue climbed to $20,516 million from $16,234 million, but its gross profit barely moved, at $3,463 million against $3,422 million. Regulatory credits fell to $146 million from $380 million. Services and other set a record gross profit of $648 million, $302 million more than in the first quarter, as Tesla reported. Energy revenue grew to $3,139 million from $2,408 million, while its gross profit fell to $640 million from $952 million. The total gross margin Tesla reported dropped to 16.8% from 21.1%. ^[1]

The numbers, quarter over quarter

Revenue was $28,236 million in the second quarter, against $22,387 million in the first. Gross profit, which is revenue minus the direct cost of what was sold, edged up 0.7% to $4,751 million. Operating income, which also takes off research, selling and administrative costs, fell 57.7% to $398 million from $941 million. Net income under GAAP, the standard US accounting rules, rose 133.5% to $1,114 million from $477 million (Dalsna Finance calculation for the changes). ^[1]

Operating expenses rose to $4,353 million from $3,779 million. Research and development grew to $2,371 million from $1,946 million, and selling, general and administrative costs to $1,982 million from $1,833 million. Stock based compensation in the cash flow statement was $1,151 million, up from $1,030 million. The quarterly report explains the rise over the first half of 2026 against the first half of 2025: research and development grew 44%, mainly on costs for AI and other programs as well as more stock based pay, and selling, general and administrative costs grew 46%, led by $577 million more stock based pay mostly tied to the 2025 CEO Performance Award. ^[1][3]

Profit margin is net income as a share of revenue. It was 3.9% in the second quarter, against 2.1% in the first (Dalsna Finance calculation: $1,114 million divided by $28,236 million, and $477 million divided by $22,387 million). The operating margin, operating income divided by revenue, fell to 1.4% from 4.2%. So the profit margin rose while the operating margin fell, and the reason sits below the operating line. ^[1]

In March 2026 Tesla put $2.00 billion into SpaceX common stock, which the quarterly report says was formerly a preferred share investment in xAI, for an ownership interest of less than 1%. Tesla carries the stake at fair value, so changes in its value pass through other income. In the second quarter that produced a $1,005 million unrealized gain, meaning the stake rose in value but was not sold. The report says the valuation took off a $238 million discount for regulatory limits on selling that run until September 2026, and that customary sales restrictions linked to the SpaceX initial public offering end in December 2026. Other income, net, came to $590 million, after an expense of $535 million in the first quarter. ^[3][1]

Taxes helped too. Tesla released a valuation allowance on certain California deferred tax assets, and together with an immaterial pillar two accrual that gave a $274 million income tax benefit, according to the quarterly report. The provision for income taxes was $201 million, down from $257 million, and interest income was $422 million. ^[3][1]

Tesla also reports non GAAP net income, its adjusted measure. It adds back share based pay after tax and takes out unrealized gains and losses on digital assets and on the SpaceX stake, along with certain tax items. In the second quarter Tesla added back $989 million of share based pay and $87 million of digital asset losses, and took out $763 million for the SpaceX gain after tax and $274 million of tax items. That left $1,153 million, down from $1,453 million in the first quarter. ^[1]

Against the second quarter of 2025, revenue rose 25.5% from $22,496 million (Dalsna Finance calculation). The quarterly report ties the $4.22 billion, or 27%, rise in car sales revenue to approximately 25% more cash deliveries. Services and other revenue grew $1.54 billion, or 50%, mainly on higher used vehicle volumes and prices, as well as non warranty maintenance, collision work and paid Supercharging. Energy revenue rose $350 million, or 13%, primarily on more Megapack deployments, partially offset by a lower average price per Megapack and fewer Powerwall deployments. Regulatory credit revenue fell $293 million, or 67%. GAAP net income was down 4.9% from $1,172 million and operating income was down 56.9% from $923 million (Dalsna Finance calculation). ^[3][1]

Cash flow and spending

Operating cash flow was $4,697 million in the second quarter, up from $3,937 million in the first. Capital expenditures more than doubled to $5,789 million from $2,493 million, so free cash flow, which Tesla defines as operating cash flow less capital expenditures, was an outflow of $1,092 million against an inflow of $1,444 million. Cash, cash equivalents and short term investments ended June at $43,524 million, $1.2 billion less than at the end of March, as Tesla reported. Its update says Tesla is in its largest period of investment, with capacity build outs for AI compute, solar, battery materials and chip manufacturing underway. ^[1]

Earnings per share

Earnings per share, or EPS, is profit divided by the number of shares. The diluted figure also counts shares that could be created from stock options and similar awards. Tesla reported diluted GAAP EPS of $0.32 for the second quarter and $0.13 for the first. Its adjusted EPS, non GAAP net income per diluted share, was $0.33 and $0.41. Dividing the net income Tesla used for EPS by its diluted shares gives the same figures. For the second quarter that net income is $2 million more than the headline figure because of a buyout of a noncontrolling interest, as Tesla shows in its update. ^[1]

In most quarters adjusted EPS is well above GAAP EPS because it adds back share based pay. In the second quarter the two nearly matched. Adding back share based pay, $0.29 a share, and digital asset losses, $0.02, was mostly cancelled by taking out the SpaceX gain, $0.22, and the tax items, $0.08, as Tesla's reconciliation shows. Paying staff in stock is a real cost to shareholders, because it spreads ownership over more shares, so the two figures answer different questions. ^[1]

What the market values Tesla at

Market capitalization, or market cap, is what the stock market values the whole company at: the share price times the number of shares. Tesla closed at $399.81 on Friday, October 30, 2026, as reported by StockAnalysis. The cover of its second quarter report to the SEC lists 3,949,547,394 shares of common stock outstanding as of July 16, 2026. That gives a market cap of about $1,579.1 billion, or about $1.58 trillion (Dalsna Finance calculation). Every multiple and share price below uses this one share count. ^[4][3]

Keep the timing in mind. The price comes after the third quarter results, so it reflects news that is not in this article. The earnings behind every multiple stop at June 30, 2026, and the share count is the one on the second quarter report's cover. The multiples below are therefore a recent price set against the second quarter's numbers, not a current valuation on the latest results. ^[4][2][3]

The cover count is higher than the 3,540 million diluted shares used for EPS. The quarterly report says restricted stock awards are left out of the diluted count until they are earned, and the 2025 CEO Performance Award alone is approximately 423.7 million shares of performance based restricted stock. Using the cover count makes the market cap and every multiple below larger than they would be on the EPS share count. ^[3][1]

Six valuation multiples

The price to earnings ratio, or P/E, is market cap divided by a year of earnings. It shows how many dollars the market is paying for each dollar of yearly profit. Annualised means one quarter multiplied by four. On that basis Tesla has a P/E of 354.4 (Dalsna Finance calculation: $1,579.1 billion divided by $1,114 million times 4, which is $4,456 million). The adjusted P/E uses non GAAP net income instead: $1,153 million times 4 is $4,612 million, which gives 342.4 (Dalsna Finance calculation). ^[1][4][3]

A forward P/E uses an estimate of future earnings. 24/7 Wall St. reported on October 2, 2026 that analysts expect EPS of $2.2011 for 2027. Multiplying that by the same 3,949,547,394 shares gives estimated earnings of about $8,693 million and a forward P/E of 181.6 (Dalsna Finance calculation on an estimate, analyst consensus as reported by 24/7 Wall St.). The estimate came after the second quarter results and before the third, and the report does not say whether it is on a GAAP or adjusted basis. The report gives one estimate per year, with no separate adjusted figure, so there is no separate adjusted forward P/E. ^[5][4][3]

A trailing P/E, sometimes called a historical P/E, uses the last four reported quarters. Tesla's GAAP net income over the twelve months to June 30, 2026 was $3,804 million, which gives a trailing P/E of 415.1. Non GAAP net income over the same four quarters added up to $6,137 million, which gives a trailing adjusted P/E of 257.3 (Dalsna Finance calculation for both). ^[1][4][3]

The last four quarters

Tesla reports each of the last four quarters in its second quarter update, so none has to be worked out. GAAP net income added up to $3,804 million and non GAAP net income to $6,137 million (Dalsna Finance calculation for the sums). ^[1]

Three base cases: the second quarter held flat for a year

Suppose revenue stayed at the second quarter's level for a full year, with no growth and no decline: $28,236 million times 4, or $112,944 million. The first base case keeps the reported 3.9% net margin, which gives earnings of $4,456 million, or $1.13 per share on the cover share count. The adjusted case keeps the 4.1% non GAAP margin, which gives $4,612 million, or $1.17 per share. Each is simply the second quarter annualised, so at its own annualised multiple it returns the October 30, 2026 close of $399.81 by construction. The other cells only show how the price moves when the same earnings are given a different multiple. ^[1][4][3]

Second quarter net income of $1,114 million was well above operating income of $398 million because of items below the operating line, including the $1,005 million unrealized gain on the SpaceX stake, $422 million of interest income and the $274 million tax benefit, against a $112 million unrealized loss on digital assets. So the third base case uses the 1.4% operating margin, which leaves out interest, taxes and other income altogether: $1,592 million a year, or $0.40 per share. Operating income is counted before tax, so this is not net income. Tesla quantified no one time item inside operating income in its update, so nothing else is subtracted. ^[1][3]

The GAAP multiples apply to the two GAAP rows and the adjusted multiples to the adjusted row, so each kind of earnings meets its own kind of multiple. The forward P/E applies to every row, because its estimate does not say which basis it uses. ^[5]

The adjusted base case in a chart

What came next

Tesla released its third quarter results on October 21, 2026, and they are covered in a separate Dalsna Finance article. That is the place to look for whether battery supply let vehicle output rise and whether the SpaceX stake kept moving net income. This article does not use any third quarter figures. ^[2][1]

After the quarter ended, on September 29, 2026, Tesla signed new senior unsecured credit agreements: a $20.0 billion delayed draw term loan facility over three years, an $8.0 billion revolving facility over five years and a $2.0 billion revolving facility that runs for 364 days. They replaced a $5.0 billion revolving credit agreement under which, the filing says, Tesla had no borrowings outstanding. ^[6]

One legal item from the quarter: on June 4, 2026 Tesla was named in a proposed class action in the US District Court for the Northern District of California. The complaint claims Tesla made certain statements about what its driver assistance systems can do. The quarterly report says Tesla intends to defend itself vigorously and cannot reasonably estimate a possible loss, if any. ^[3]

How these figures were made: inputs come from Tesla's second quarter 2026 update and quarterly report on SEC EDGAR, its September 29, 2026 filing on the credit agreements, the dated closing price and the dated consensus report named above. Calculations use unrounded inputs and are rounded only at the end, with multiples to one decimal and per share figures and prices to the cent. ^{[1][3][6][4][5]}