Shares of Tesla declined more than 2% on Monday, underperforming broader US equity markets.
The move came as investors turned cautious ahead of the company’s first-quarter earnings report and awaited updates on its artificial intelligence strategy.
The stock’s decline came even as the Dow Jones Industrial Average slipped just 0.1%, while the S&P 500 fell 0.2% and the Nasdaq Composite declined 0.4%.
Pullback follows strong weekly rebound
The weakness follows a strong rebound in Tesla shares last week, when the stock rose nearly 15% to snap an eight-week losing streak.
Despite the recovery, shares remain down about 7% since the company reported fourth-quarter results in late January.
Tesla’s earlier gains were supported by a broader market rally, with the S&P 500 rising 4.5% as oil prices eased on expectations that the Iran conflict could move toward resolution.
Tesla earnings in focus
Investor attention is now centred on Tesla’s upcoming first-quarter results, due later this week.
Wall Street expects earnings per share of 36 cents on revenue of $22.3 billion.
A year earlier, Tesla reported earnings of 27 cents per share on revenue of $19.5 billion.
The projected growth reflects higher vehicle deliveries, which reached approximately 358,000 units in the first quarter of 2026, up from about 337,000 in the same period last year.
However, expectations for the core electric vehicle business remain subdued, with broader industry demand facing headwinds.
US electric vehicle demand has weakened following policy changes.
President Donald Trump eliminated the $7,500 EV purchase tax credit in September, contributing to a 27% year-on-year decline in all-electric vehicle sales.
EVs now account for less than 6% of total new car sales, down from more than 10% in the third quarter, when buyers accelerated purchases ahead of the tax credit’s expiration.
These trends have weighed on sentiment toward Tesla’s automotive business, even as delivery volumes have increased.
Given the scale of retail participation in Tesla stock, investors globally will be closely tracking its moves on their online investment apps ahead of the company’s earnings.
AI strategy remains central to valuation
Despite concerns around EV demand, Tesla’s valuation continues to be driven primarily by expectations around its artificial intelligence initiatives.
Investors are expected to focus on updates related to robo-taxis and humanoid robotics when the company reports earnings.
Tesla has indicated plans to significantly expand its robo-taxi service, initially launched in Austin, Texas, though progress has been gradual.
The pace of expansion has been a key factor behind the stock’s decline earlier this year, with shares down 11% year-to-date heading into Monday’s session.
Analysts on Tesla stock
Over the weekend, Tesla expanded its robotaxi operations to Houston and Dallas, marking its first geographic expansion since launching in Austin and San Francisco.
According to Morgan Stanley, the rollout represents a notable shift, with vehicles operating without in-car human safety monitors—unlike earlier deployments.
The firm maintained an Equalweight rating and a $415 price target, noting that the expansion signals tangible progress at a time when investor scepticism had been increasing.
Analyst sentiment remains mixed ahead of earnings. Jefferies raised its price target on Tesla to $350 from $300 while maintaining a Hold rating, citing improved medium-term growth expectations.
The firm expects first-quarter revenue of $21.2 billion, up 10% year-on-year but down 15% sequentially.
It also forecasts a decline in core automotive gross margins to 15.5% from 17.2% in the previous quarter, reflecting lower volumes and higher depreciation and amortisation costs.
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