Upland, CA USA – June 19 2023: The TESLA Delivery Center in Upland supports Tesla-designed and manufactured electric vehicles throughout Southern California. Tesla’s next earnings report is on July 22.
getty
Tesla stock has fallen about 7% so far in 2026 and the shares are poised to possibly fall further during the rest of the year. That decline is due to price cutting which yielded record shipments and declining margins even as much of the revenue uptick was due to automotive one-time benefits related to warranty and tariffs. As Tesla attempts a transition to robotaxis, self-driving cars and humanoid robots, the core business faces intense price competition from Chinese rivals such as BYD.
With the high valuation of Tesla’s stock – a price/earnings ratio of 373 – and Elon Musk’s track record of overpromising, it’s likely the shares will drop – unless SpaceX offers to buy the company.
The Current State Of Tesla Heading Into Late 2026
Tesla’s operational performance is currently a mix of record-breaking volume and shrinking profitability. Investors are alarmed by a significantly higher than expected forecast for capital expenditures and a July 22 earnings report could shake the stock unless Tesla delivers an upside surprise.
Tesla’s most recent financial results were mixed. Revenue of $22.39 billion fell $250 million short of analysts polled by London Stock Exchange Group while adjusted earnings per share of 43 cents were 4 cents a share above estimates, according to CNBC.
Tesla’s second quarter results – expected July 22 – are likely to move the shares. If Tesla exceeds expectations and raises guidance, the stock is likely to rise. A positive sign for Tesla was a July 2 report of expectation-beating second-quarter deliveries of 480,126 – 73,526 above the StreetAccount consensus, per CNBC. Growth came largely from Europe – where deliveries were up 108%, according to Intellectia – and China – where June wholesale volume rose 24%.
In scrutinizing Q2 results, investors may examine whether Tesla exceeds the consensus non-GAAP EPS range between $0.44 and $0.47. Attention will also focus on whether the surge in deliveries was due to price cuts that reduce automotive gross margin below expectations.
Why Tesla Stock Could Sink In Second Half Of 2026
Tesla stock could sink in the second half because investors are realizing that $1.6 trillion is a high value to assign a company betting $25 billion in capital expenditures on a new and unproven market opportunity in robotaxis, full self-driving electric vehicles and Optimus humanoid robots, which does not generate meaningful revenue, according to analysts at TIKR.
One relatively bright spot – which was 13% of the company’s 2025 revenue – is its energy business. In 2025, it achieved 26.6% revenue growth to $12.8 billion in its energy division.. This business earned nearly 30% gross margins last year; Tesla also saw margins deteriorating due to “low-cost competition, policy uncertainty and tariff impacts,” according to Battery Tech Network.
High Valuation
Tesla’s valuation is nearly 15 times higher than the vehicles and parts industry average. At roughly $408 per share on July 10 and a $1.28 trillion stock market capitalization, Tesla traded at a price/earnings ratio of 373 and the company’s forward PE of around 192x was 14.7 times more than the vehicles and parts industry median forward P/E near 13x.
EV Business Losing Market Share
Tesla is losing market share in its core EV market. Tesla’s U.S. EV market share declined from nearly 80% in 2019 to around 43.9% for the entirety of 2025, marking the first time its annual share dropped below the 50% threshold – although as of July 2026, the share loss had stabilized, according to Cox Automotive.
While in 2012, there were fewer than 20 EV models, by 2026 there were well over 100. A big reason for Tesla’s loss of market share is China’s BYD which between late 2024 and throughout 2025 was the world leader in EV, Canary Media noted. Other forces costing Tesla market share are shifting subsidies and increased demand for hybrid vehicles.
Betting On An Uncertain New Business
Tesla does not break out individual revenue lines for its autonomous and robotics projects and does not generate meaningful revenue here. A dedicated robotaxi fleet is not expected to arrive until at least 2027, noted Electrek.
Musk has fallen short of his robotaxi promises. For example, on October 21, 2019, he promised “over a million robotaxis” on the road within a year; none materialized by the deadline, The Drive reported. As of May 2026, Tesla was 0.002% of the way to that goal with 20 robotaxis on the road, according to Elektrek.
Wall Street Consensus And Price Targets
Wall Street considers Tesla slightly over-valued. Twenty nine analysts who cover the stock set an average price target of $400.59. Analyst targets range widely from $600 to $24.86.
Is Tesla Stock Worth Buying Now?
I do not find a compelling reason to buy the stock. If you believe Tesla is an AI, robotics and energy company rather than a carmaker; can tolerate extreme volatility and a multi-year payoff horizon; and you treat the position as a call option on a venture-backed growth opportunity, buying the stock may be attractive.
If you do not agree with this scenario, look elsewhere for investment opportunities.
Tesla is a story stock with a deteriorating core business and a future bet on a highly uncertain market opportunity. I would not invest.
