Tesla recognizes a Bitcoin loss of over $200 million, with capital expenditures surging—TSLA is still down 15% this year.

Tesla (Tesla) announced its 2026 first-quarter financial results yesterday, revealing changes in the company’s financial structure as it expands investment in artificial intelligence and autonomous driving. This quarter, Tesla’s total revenue reached $22.4 billion, up 16% from the same period last year, and its earnings per share (EPS) also delivered an impressive $0.41. However, with a future capital expenditure plan estimated as high as $25 billion, the market is highly focused on the long-term sustainability of its cash flow; in addition, Tesla recorded a $222 million impairment of its bitcoin assets. Tesla’s (TSLA) stock price is still down 15% this year. Whether it can rise alongside the SpaceX IPO remains worth watching.

Tesla’s earnings report is impressive; shares turned from up to down after hours

This quarter, Tesla’s total revenue reached $22.4 billion, up 16% from the same period last year. Its earnings per share under its non-GAAP basis also delivered an impressive $0.41. These key figures beat the market’s conservative expectations smoothly, lifting short-term market sentiment. Tesla’s (TSLA) stock price once rose more than 4% after hours, but after the earnings call, it fully gave back the gains, falling 0.31%.

Musk raises capital expenditures and warns future free cash flow could turn negative

In the first quarter of 2026, Tesla generated about $1.4 billion in free cash flow, mainly driven by a $3.9 billion contribution from operating cash flow. This shows that despite challenges from lower vehicle deliveries, the company still has strong cash generation capabilities at the core operating level.

Despite relatively steady cash flow performance in the first quarter, management issued a warning during the earnings call that free cash flow in the coming quarters could turn negative. The main reason is that the company, to drive Robotaxi, the Optimus robot, and AI infrastructure, expects its full-year 2026 capital expenditures to exceed $25 billion—about three times last year’s spending. This investment plan is higher than the previously estimated figure of about $20 billion. These investments will be used to significantly expand factory operations, including producing Optimus humanoid robots, artificial intelligence projects, and Cyber​​cab autonomous driving vehicles. This strategy of sharply tilting resources toward the artificial intelligence space inevitably will rapidly consume operating capital. In a period of high capital costs, undertaking large-scale infrastructure investment directly tests the company’s capital allocation efficiency. This means Tesla is making way with short-term free cash flow in exchange for long-term technological leadership.

Tesla records a $222 million impairment of its bitcoin assets

In this quarter’s financial results, Tesla’s net income was again dragged down by impairments of digital assets (bitcoin). Under current accounting standards, digital assets held by companies must be recognized as unrealized gains or losses based on market value. Recent volatility in cryptocurrency prices has forced Tesla to recognize digital-asset impairments for two consecutive quarters; this quarter, it recognized a total of $222 million. What needs clarification is that these impairments are non-cash expense items. Although they erode current-period reported net income and earnings per share (EPS), as long as there is no actual sale, they do not meaningfully reduce the company’s cash reserves.

Tesla’s strategic transition—can the SpaceX IPO drive a surge in the stock?

Taken together, with expectations for free cash flow turning negative and the book-value volatility of digital assets, Tesla is going through the painful phase of transitioning from a traditional automaker into an AI infrastructure company. The logic the capital market uses to interpret its financial statements has gradually shifted from focusing solely on gross margin and vehicle delivery volumes to evaluating the efficiency of AI capital investment. Investors should understand that the inevitable result of massive capital expenditures during the transition period is the compression of short-term profits and cash flow.

Many of Tesla’s shareholders come for Musk’s vision. SpaceX, Musk’s company, is expected to have its IPO as early as June this year. According to earlier reports, Musk sold some of SpaceX’s shares to Tesla. Whether Tesla’s stock price can rise accordingly remains to be seen, especially since TSLA is still down 15% this year. Under the “Musk 10-year compensation and voting rights plan,” Musk’s stock price target in the first phase is $612; only then would he have a chance to receive a bonus.

(Trade stocks with Musk? The compensation plan could push Tesla’s share price to $2,300)

This article Tesla records more than $200 million in bitcoin losses; capital expenditures surge; TSLA is still down 15% this year first appeared on Lian News ABMedia.