Tesla Needs ‘Way More’ Spending But Cash Is Tight, Paul Meeks Warns Ahead Of Q1 Earnings Print
During an interview with CNBC, Meeks stated that Tesla is currently caught in the crosshairs ahead of its first-quarter earnings later today, citing its declining electric vehicle sales.
- Meeks added that Tesla’s current position is a “little scary,” noting that investors will want to see some stabilization in the company’s EV business.
- The analyst added that, with Tesla’s Q1 earnings due later today, he is looking for milestones in autonomy.
- He thinks Tesla’s autonomy development is more important than its humanoid robotics, which is further down the line.
Paul Meeks, Head of Technology Research at Freedom Capital Markets, on Wednesday stated that Tesla Inc. (TSLA) will have to spend a lot more on capital expenditure, but added that the company’s cash flow position is a little tight.
During an interview with CNBC, Meeks stated ahead of Tesla’s first quarter (Q1) earnings later today that the company is currently caught in the crosshairs, pointing to its declining electric vehicle sales.
Tesla shares were up nearly 1% in Wednesday’s pre-market trade.
Meeks Says It’s A ‘Little Scary’
Meeks added that Tesla’s current position is a “little scary,” noting that investors will want to see some stabilization in the company’s EV business.
“Tesla is in the crosshairs. It’s a little scary to me, because you have the declining EV business… of course at this point, I don’t think anyone really cares about the EVs, but you do want to see them stabilized if you’re interested in the auto gross margin,” Meeks said.
The analyst added that with Tesla’s Q1 earnings due later today, he is looking for some milestones on autonomy. He thinks Tesla’s autonomy development is more important than its humanoid robotics, which is further down the line.
Analysts at Cantor Fitzgerald termed 2026 as a transitional year for Tesla, according to TheFly. The firm cited Tesla missing Wall Street expectations with its Q1 deliveries and energy deployments. Cantor analysts stated that the focus is now shifting to initiatives such as Robotaxi, Optimus, and expanded deployments of Tesla’s autonomous driving technology in Europe.
Cantor has an ‘Overweight’ rating on the Tesla stock, with a $510 price target.
Analysts at Jefferies cautioned that Tesla’s Q1 results will show that the company’s ambition to offer Robotaxi services to 25-50% of the U.S. market by the end of the year “look beyond reach.”
What Does Tesla Need To Do To Be A Next-Gen Leader?
Meeks explained that Tesla needs to ramp up its capex if it wants to be a leader in the next-generation technologies.
“They’re going to have to spend a hell of a lot more on capital expenditures, even way beyond the EV business,” he said.
However, it won’t be an easy task for Tesla. Meeks pointed to Tesla’s operating cash flow getting tighter due to the company’s current capex, after the company spent $2.4 billion in the previous quarter.
The analyst added that he is worried that if Tesla ramps up capex significantly, it will put the company’s free cash flow in the deeply negative territory.
Earlier this week, The Future Fund LLC Managing Partner Gary Black warned that Tesla’s valuations are “too rich”, adding that that stocks cannot maintain price-to-earnings multiples of more than 200 unless their franchises are uniquely scalable and unassailable. Tesla’s 12-month forward PE is currently at 192.
Tesla is scheduled to report its Q1 earnings on April 22, 2026. Wall Street expects the company to report earnings per share (EPS) of $0.38 on revenue of $22.34 billion, according to Fiscal.ai data.
How Did Retail Traders React?
Retail sentiment on Stocktwits around Tesla trended in the ‘extremely bullish’ territory, with message volumes at ‘neutral’ levels at the time of writing.
One bullish user stated that Tesla’s Robotaxi services are expanding with just a flick of a switch.
TSLA stock is down 14% year-to-date, but up 70% over the past 12 months. The S&P 500 ETF (SPY) is up 37% over the past 12 months, while the Invesco QQQ Trust ETF (QQQ) is up 49%.
The Vanguard Growth Index Fund ETF (VUG) is up 43%, while the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) is up 32%.
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