It’s been a rough start to 2026 for Tesla investors. Honestly, the vibes are a bit chaotic right now. Just when people thought the stock might stabilize after the New Year, Tesla shares fall further on concerns over Elon Musk and a cocktail of missed delivery targets.
The stock hit a seven-day losing streak this January, dragging the price down toward the $430 mark. For a company that was recently flirting with a $1.5 trillion valuation, this slide feels personal to the shareholders who’ve stuck by Musk through thick and thin. But this isn't just about one bad week of trading. It’s a deeper worry that the "Musk Premium"—that extra value investors pay because they believe Elon is a wizard—is starting to evaporate.
The Delivery Miss and the BYD Problem
Last week’s data was the first big domino to fall. Tesla reported 418,227 deliveries for the fourth quarter of 2025. Sounds like a lot, right? Well, Wall Street didn't think so. It was a 16% drop compared to the same period the year before. For the first time ever, Tesla has seen two straight years of declining annual sales.
Meanwhile, BYD is absolutely crushing it. The Chinese automaker officially snatched the global EV crown away from Tesla in 2025, delivering over 2.2 million battery-electric vehicles. While Tesla is still trying to figure out how to sell more Model 3s without a massive tax credit (which expired last September), BYD is flooding markets in Europe and Asia with cars like the Dolphin Surf that cost half as much as a Tesla.
Why investors are getting twitchy
- The Tax Credit Cliff: Without the U.S. federal EV tax credit, out-of-pocket costs for buyers jumped significantly.
- Model Y Fatigue: The "Juniper" refresh of the Model Y was supposed to save the day, but production hiccups made for a very "noisy" transition.
- Pricing Wars: Tesla keeps cutting prices to stay competitive, but that’s eating their profit margins alive.
It’s a classic squeeze.
Elon's Distractions and the FSD Pivot
The real "Elon" factor in why Tesla shares fall further on concerns over Elon Musk involves his latest pivot. Musk recently announced on X (formerly Twitter) that Tesla would stop selling Full Self-Driving (FSD) for a one-time $8,000 fee. From now on, it’s subscription-only at $99 a month.
Investors hate uncertainty. This move feels like a desperate attempt to juice recurring revenue because car sales are stalling. Some analysts, like Gordon Johnson, think this move actually hurts the long-term value. If you can't "own" the software, does the car still hold its value as a potential robotaxi?
And then there's the Delaware drama. Even though the Delaware Supreme Court recently restored Musk’s $56 billion pay package—a huge win for him—it reminded everyone just how much control he has. The court basically said he’s a "superstar" who creates a "distortion field" around the board of directors. For some, that's a reason to buy. For others, it’s a massive red flag for corporate governance.
The Trillion-Dollar AI Gamble
Musk wants you to stop thinking of Tesla as a car company. He’s betting everything on Optimus (the humanoid robot) and the Cybercab. He’s even hinted that Optimus could eventually account for 80% of Tesla’s value.
"Tesla isn't just a car company—it's an undervalued AI empire." — Charlie Garcia, Morningstar contributor.
But here is the catch: Optimus isn't doing your laundry yet. The Cybercab isn't picking you up from the airport. These are "maybe" products for 2027 or 2028. In the meantime, the company is trading at a price-to-earnings (P/E) ratio of nearly 300. To put that in perspective, most tech giants sit well under 50. You’re paying for a future that hasn't arrived while the present—the actual car business—is shrinking.
The Bear vs. Bull Stance
Analysts are split down the middle. Wells Fargo recently slapped a $130 price target on the stock. That’s a terrifying 70% drop from where we are now. Their logic? Everything is moving in the wrong direction at once: deliveries are down, market share is down, and margins are thin.
On the flip side, Dan Ives at Wedbush is still pounding the table for a $2 trillion market cap by the end of the year. He thinks the "AI chapter" is just beginning. He’s looking at xAI’s massive supercomputers and Musk’s ability to "whip the faithful into a frenzy" as a feature, not a bug.
Is the "Elon Factor" Still a Net Positive?
It’s complicated. Musk’s involvement with X and his increasingly vocal political stances have definitely alienated some core Tesla buyers in the U.S. and Europe. Some people just don't want to drive a car associated with his brand anymore.
But then you look at what he’s actually built. SpaceX is landing rockets. The Shanghai Gigafactory was built in record time. Musk has a track record of doing the "impossible," which is why the stock doesn't trade like a normal car company. If you bet against him, you’ve historically lost money.
However, 2026 feels different. The competition isn't just catching up; in many ways, they've passed Tesla. Hyundai, Kia, and General Motors have great EVs on the road right now. They don't have the "drama" that comes with a Musk-led company.
Actionable Insights for Investors
If you’re holding Tesla or thinking about buying the dip, here is the reality of the situation.
First, watch the January 28 earnings report. This is the big one. If Tesla misses on earnings or gives weak guidance for the rest of 2026, the $400 support level might break.
Second, understand your timeline. If you’re a day trader, the volatility is a nightmare. If you’re a 10-year investor, you’re basically betting on whether you believe Musk can actually build a fleet of millions of robots.
Third, diversify. Relying on a single person—no matter how brilliant—to protect your wealth is risky. The "Musk Premium" is a double-edged sword. It drives the stock to the moon when things are good, but it causes a total meltdown when concerns over his leadership start to mount.
What you should do next:
Audit your portfolio's exposure to "key-man risk." If Tesla makes up more than 10% of your holdings, consider whether you are comfortable with the stock's 300 P/E ratio in a world where sales are currently declining. Keep a close eye on FSD subscription take-rates in the next quarterly filing, as this will be the truest indicator of whether Musk's pivot to a "software-first" company is actually working.