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Wednesday's Bonus Story
Tesla: Why Things Could Get Worse Before They Get BetterSubmitted by Sam Quirke. Originally Published: 4/13/2026. 
Key Points
- Tesla shares have had a rough first quarter and remain under pressure after this week’s weak delivery data.
- Analyst opinion is sharply divided, with recent price action pointing to further downside risk in the near-term.
- However, with earnings approaching and sentiment close to rock bottom, the setup could still favor a sharp rebound if the report is strong enough.
- Special Report: Elon’s “Hidden” Company
Shares of automotive giant Tesla Inc (NASDAQ: TSLA) are trading near $345, roughly 30% below their December highs and stuck in a persistent downtrend. What looked like a healthy January pullback has increasingly morphed into a longer-term slide, with rallies being sold and lower lows being set. At the start of the year there was a clear narrative shift underway. Investors began to view Tesla more as a robotics and automation company than solely an electric vehicle (EV) maker. That reframing helped justify the company's triple-digit valuation and resilient bullish sentiment, but in recent weeks that optimism has started to fade. This week’s weak delivery data has pulled attention back to Tesla’s core automotive business. With little tangible progress visible from the pivot to automation, bulls have fewer fundamentals to lean on. With a little less than two weeks until the next earnings report, it’s possible things could get worse before they get better. Weak Deliveries Bring Focus Back to the Core Business
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This week’s delivery report was another disappointing data point for Tesla investors, coming on the heels of a brutal first quarter. Expectations weren’t particularly high, but the numbers reinforced concerns about slowing demand and mounting competition in the EV market. When Wall Street was buying into Tesla’s long-term autonomy and AI narrative, short-term delivery swings were easier to overlook. Now that that narrative has lost momentum, investors are re-anchoring expectations to vehicle deliveries and the health of the core business. A Premium Valuation Means Even Less Room for ErrorThat would be less worrying if Tesla’s valuation weren’t still elevated. Even after the recent pullback, the company’s price-to-earnings ratio sits well above 300, implying significant future growth is already priced in. That leaves little margin for disappointing updates like this week’s delivery figures or continued uncertainty around profitability from its autonomy and robotics initiatives. Some analysts remain optimistic. Just this week Deutsche Bank reiterated its Buy rating, arguing the weakness presents an opportunity. That view must be weighed against JPMorgan’s recent decision to reaffirm a Sell rating, echoing BNP Paribas’ move last month. Price Action Suggests More Pain Could Be ComingBears argue that weakening fundamentals paired with a premium valuation is a dangerous combination. The chart’s downtrend, which pushed to fresh lows this week, gives that argument weight. Technically, the stock has been making lower highs and lower lows since December, and until that pattern breaks, it’s difficult to adopt a bullish stance. Sentiment has also soured: the relative strength index is flirting with extremely oversold levels, an unusual setup for those sitting on the sidelines. On one hand, fundamentals and price action point to further downside risk. On the other, you could argue the worst-case scenario is nearing being fully priced in—historically a setup where Tesla has surprised skeptics. Earnings Will Be KeyThe company’s upcoming earnings report, due April 22, takes on added importance. With expectations reduced and sentiment low, the potential for a meaningful upside surprise exists but is limited. Investors will watch for any signs that the autonomy, robotics, and AI strategies are translating into tangible progress. Equally important will be updates on margins and EV demand trends to determine whether the core automotive business is stabilizing. If Tesla posts modestly better-than-expected results and offers a clearer path forward, the stock could start to attract buyers. Conversely, if the report disappoints or reinforces current concerns, the existing downtrend could extend to fresh lows. Given the premium multiple, market forgiveness is unlikely. |
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