TSLA Tumbles 14% After Earnings, But Reddit Traders Are Split on What Comes Next

TSLA fell 14% after Q2 earnings missed estimates, with operating margin collapsing to 1.4% and free cash flow turning negative.
Reddit sentiment remained positive (0.24) despite the drop, with many traders viewing the selloff as an opportunity to buy calls or short-term puts.
The AI capex debate intensified: TSLA's spending spree spooked some investors but reinforced the broader AI infrastructure trade.

$TSLA was the most-discussed stock on Reddit on July 24, with 30 posts and 690 comments. The stock's 14% plunge after earnings on July 23 dominated conversation across r/wallstreetbets, r/stocks, r/daytrading, and r/ValueInvesting. The selloff was the largest single-day drop for the stock since the tariff shock in April 2025, according to one institutional trader on r/daytrading.

Earnings Miss Sparks a Selloff, But Not a Panic

Tesla reported Q2 revenue of $28.2 billion, up 26% year over year, but adjusted earnings per share of $0.33 missed the $0.54 consensus. Operating margin collapsed to 1.4% from 4.1% a year ago, driven by a 47% surge in operating expenses. Free cash flow turned negative as capital expenditures exceeded $25 billion on an annualized basis. The market punished the stock immediately, with

$TSLA falling 14.38% on Thursday, July 23.

Despite the brutal headline numbers, Reddit sentiment toward

$TSLA remained mildly positive at 0.24 on a scale from -1 to 1. Many retail investors viewed the selloff as an overreaction, pointing to the company's aggressive AI infrastructure buildout as a long-term catalyst rather than a near-term drag.

Reddit Traders Bet Both Ways

Options activity on

$TSLA was frenetic. A r/wallstreetbets user detailed averaging down on TSLA calls after the earnings dump, now holding 36 contracts of the 8/28 $335 call with an average premium of $11.24. “Is this a reasonable volatility play, or am I just manufacturing a huge loss?” they asked. On the other side, an r/OptionsMillionaire trader bought TSLA 315 puts at 10:46 a.m. on July 24 and sold them for a 113% gain as the stock bled to $309. Meanwhile, a r/smallstreetbets user called Elon Musk a “scammer” and urged shorting

$TSLA, claiming they made thousands shorting in a week.

The AI Capex Debate Takes Center Stage

A recurring theme across multiple subreddits was whether Tesla's massive capital spending—and the resulting negative free cash flow—should be viewed as a red flag or a necessary investment. An institutional trader on r/daytrading noted that TSLA's capex increase leading to its first cash burn in years was actually “positive for the AI trade” because the company is aggressively expanding clusters in Texas. A r/stocks user questioned whether free cash flow still matters for AI capex names, pointing out that Intel raised its own capex guidance in the same week and was rewarded by the market. The contrast between Tesla's punishment and Intel's reward highlighted the market's selective view of capital spending.

Another r/stocks post observed that while

$TSLA and Alphabet fell on AI capex fears, Super Micro Computer surged 17% on $60 billion in new orders—reinforcing the market's preference for “picks and shovels” providers over the companies actually spending the capital.

What's Next for TSLA?

The debate over

$TSLA remains deeply divided. Bulls point to the company's AI and robotics ambitions, including a potential Tesla-SpaceX merger that Elon Musk didn't rule out on the earnings call. Bears highlight margin compression, rising competition from BYD (which delivered 557,090 BEVs in Q2), and a P/E ratio that still implies enormous future success. For now, retail investors are treating the stock as a high-volatility playground, with options traders on both sides finding opportunities in the chaos.

TSLA

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