Look, if you’ve been watching the tickers lately, you’ve probably felt that pit in your stomach. Everyone is asking the same thing: is tesla stock going down for good this time, or is this just another classic Elon-induced roller coaster? Honestly, it’s a bit of both. We’re sitting in early 2026, and the "vibe shift" at Tesla is real. The days of Tesla being a "bulletproof" growth story are kinda over, replaced by a much messier reality where the company is trying to stop being a car company and start being an AI powerhouse.
The numbers aren't exactly pretty. Tesla just wrapped up 2025, and for the second year in a row, vehicle deliveries actually dropped. They moved about 1.64 million cars, which is a roughly 8.5% slide from the year before. For a company that used to promise 50% annual growth like it was a law of physics, that’s a massive reality check.
Why the "Car Side" of the Business is Struggling
The biggest reason the stock feels shaky is that the core business—selling cars—is getting hammered. You’ve probably seen the headlines about BYD. The Chinese giant finally did it; they blew past Tesla in total EV sales in 2025, moving over 2 million battery-powered vehicles.
It’s not just a China problem, though. In Europe, Tesla’s market share basically fell off a cliff, dropping nearly 40% in some regions. People used to buy a Tesla because it was the only good EV. Now? You’ve got the Hyundai Ioniq 6, the Kia EV6, and a literal army of cheaper, high-tech Chinese cars like the BYD Seal and the Xiaomi SU7 flooding the market.
To keep the lights on, Tesla has been slashing prices like crazy. While that’s great if you’re looking to buy a Model Y, it’s been brutal for the stock. Lower prices mean lower margins. Automotive gross margins have skidded down to around 16%, a far cry from the 30% they were bragging about a few years back. When margins shrink, the "premium" valuation of the stock starts to look a lot more fragile.
The AI and Robotaxi Hail Mary
So, if the car sales are down, why hasn't the stock totally collapsed? Basically, because of the "Musk Premium."
Wall Street is currently pricing Tesla not as a car company, but as a robotics and AI firm. That’s why you see a price-to-earnings (P/E) ratio sitting north of 300x. It's wild. If you valued Tesla like Toyota or Ford, the stock would probably be trading at $40 instead of $400+.
Investors are betting everything on three things:
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- The Cybercab: The dedicated robotaxi that’s supposed to enter mass production in April 2026.
- Optimus: The humanoid robot that Elon says will eventually make up 80% of the company's value.
- FSD (Full Self-Driving): The move to a $99/month subscription model to create steady, high-margin software revenue.
If these work, the stock goes to the moon. If they’re delayed—which, let’s be real, is sort of Tesla’s specialty—the stock could see a massive "multiple compression." That’s fancy talk for the stock price crashing because people stop believing the sci-fi promises.
What the Analysts are Actually Saying
Experts are more split than a 1950s diner milkshake.
On one side, you’ve got the bears like Wells Fargo. They recently raised their price target slightly, but they’re still "Underweight." They look at the 16% drop in sales and see a company that’s overvalued and losing its competitive edge. They’ve warned that if the Robotaxi doesn't show "real" results soon, the stock could see a 70% downside.
On the flip side, the bulls are looking at the Energy Storage business. This is the part of Tesla nobody talks about at parties, but it’s actually killing it. They deployed a record 14.2 GWh of energy storage in Q4 2025 alone. It's growing way faster than the car business and provides a much-needed safety net for the revenue.
Is Tesla Stock Going Down? The Short-Term Outlook
If you're looking at the next few months, things are "consolidating." That’s investor-speak for "everyone is waiting for the Q4 earnings call on January 28."
The options market is showing a lot of "put" interest around the $380 mark. If the earnings report shows that margins are still shrinking or if Elon gives a vague guidance for 2026, we could easily see the stock test those lower levels. However, there’s also a lot of "call" interest at $450, meaning plenty of traders are betting that the April production start for the Cybercab will spark a massive rally.
Actionable Insights for Your Portfolio
So, what do you actually do with this?
- Watch the $380 Support Level: If the stock breaks below this on high volume after earnings, it could indicate a longer-term bearish trend.
- Monitor the "Take Rate" of FSD: Tesla's pivot to a $99 subscription is a move to juice their margins. If people aren't signing up, the "AI Story" loses its teeth.
- Keep an eye on BYD's expansion: If BYD starts making major moves into the North American market (via Mexico), it’s a direct threat to Tesla's home turf.
- Check the Energy Segment: If car sales are flat but Energy continues to grow at 50%+ year-over-year, it provides a "floor" for how far the stock can actually fall.
The reality is that is tesla stock going down isn't a simple yes or no. It's a "yes" for the traditional car business and a "maybe not" for the AI future. If you're holding TSLA, you aren't betting on a car company anymore; you're betting on a robotics lab that happens to have a car factory attached to it.
Next Step for You: Review your portfolio's exposure to the "Magnificent Seven." With Tesla's P/E ratio still being an outlier compared to its actual earnings growth, ensure you aren't over-leveraged on the "AI hope" without seeing the "AI cash flow" first.