TLDR
- Stock closed down 3.36% at $416.98 after fourth-quarter results showed 3% revenue decline
- Model S and Model X vehicles being discontinued starting next quarter
- Active full self-driving subscriptions grew 38% to 1.1 million users
- Robotaxi fleet expanding to seven new cities in first half of 2026
- Free cash flow dropped 30% to $1.4 billion as company plans massive spending increase
Tesla stock continued its downward trend Thursday, closing at $416.98 after dropping 3.36%. The decline adds to a rough month that has seen shares fall more than 11%.
The fourth-quarter earnings report revealed troubling financials alongside promising technology developments. Revenue slipped 3% compared to the previous year. Earnings per share crashed 60%. Total vehicle deliveries fell 16% during the three-month period.
CEO Elon Musk made it clear the company is changing course. Tesla will phase out two of its most recognizable products while doubling down on artificial intelligence and robotics.
Legacy Models Get Cut
Production of the Model S and Model X ends next quarter. The Model S launched in 2012 and helped transform Tesla from startup to major automaker.
Musk defended the decision on the earnings call. He described it as an “honorable discharge” for vehicles that served their purpose. The factory space will be repurposed for manufacturing Cybercab robotaxis and Optimus humanoid robots.
Tesla vice president Lars Moravy said the company is transitioning from selling vehicles to providing transportation services. This represents a fundamental business model change.
Self-Driving Growth Accelerates
Tesla now counts 1.1 million active subscribers paying for full self-driving software. The 38% annual growth rate exceeds the company’s 22% vehicle delivery growth.
The robotaxi network currently operates approximately 500 vehicles in Austin and the San Francisco Bay Area. Tesla aims to add seven more cities during the first six months of 2026.
Monthly fleet doubling is the stated goal. At that pace, Tesla would quickly overtake Waymo’s current fleet of 2,000 autonomous vehicles.
The Cybercab starts production in April. This vehicle is designed specifically for autonomous operation and won’t include a steering wheel. Musk even floated the idea of converting Cybertruck assembly lines to build autonomous delivery vehicles for urban areas.
Money Matters
Fourth-quarter free cash flow totaled $1.4 billion, down 30% from the prior year. This metric faces continued pressure as Tesla ramps up infrastructure investments.
Capital expenditures will surpass $20 billion in 2026. That’s more than double the roughly $8.5 billion spent in 2025. The money goes toward AI computing power and manufacturing capacity.
Tesla skipped providing vehicle delivery guidance for 2026. Management said multiple factors including demand, supply chains, and fleet allocation decisions would influence the final number.
The company’s energy storage business posted solid results. Deployment reached 14.2 gigawatt-hours in the fourth quarter, up 29% year-over-year.
Robot Dreams
Optimus Gen 3 humanoid robot unveiling happens this quarter. Production begins before 2026 ends with eventual annual capacity of 1 million units.
Analysts calculate significant revenue potential. At 500,000 units per year and $50,000 per robot, Optimus could generate $25 billion annually. The discontinued Model S and X generated approximately $3 billion combined.
The stock currently trades at a price-to-earnings ratio near 389. Market capitalization stands at $1.4 trillion. Some analysts project a path to $2 trillion or even $3 trillion by year-end depending on execution.
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