Tesla (TSLA) shares closed Monday at $298.40, down 2.7% on the session and below $300 for the first time since February 11. The stock is now off 21% from its January high of $377 and underperforming the Nasdaq Composite by roughly 25 percentage points YTD. Trading volume was 1.4x the 30-day average.
The catalysts were two-fold. First, China Passenger Car Association (CPCA) preliminary data for the third week of April showed Tesla wholesale deliveries from the Shanghai Gigafactory at 11,400 units, down 28% year-on-year and 14% week-on-week. Domestic Chinese rivals BYD (1211.HK) and Xiaomi (1810.HK) continued to gain share, with Xiaomi's YU7 model reportedly outselling the Tesla Model Y in tier-1 cities. Second, the California Public Utilities Commission (CPUC) issued a procedural order delaying Tesla's robotaxi expansion permit by 90 days, citing required additional safety-data submissions.
Q1 Earnings Recap
Tesla reported Q1 results on April 22. Revenue of $21.7 billion missed the $22.4 billion consensus, and adjusted EPS of $0.42 came in two cents shy of expectations. Automotive gross margin (ex-credits) compressed to 14.8% from 16.4% in Q4. The company maintained its guidance of "modest" 2026 deliveries growth and committed to a Cybercab unveil event for early Q3. Free cash flow of $660 million was the lowest since Q1 2023.
CEO Elon Musk's post-earnings call commentary emphasized the company's vision for "millions of robotaxis on U.S. roads by end of 2027," but repeatedly conceded that regulatory pacing rather than software performance would dictate the rollout cadence. The Federal Motor Vehicle Safety Standards (FMVSS) remain the principal hurdle for unsupervised cabs without steering wheels.
Sentiment Cooling Across the Street
Wells Fargo's Colin Langan downgraded TSLA to underweight Monday with a $230 price target, citing margin compression and a "structurally narrowing premium" relative to legacy automakers. Morgan Stanley's Adam Jonas maintained overweight at a $410 target but trimmed his Q2 delivery estimate by 8%. Bears point to a 12-month forward P/E of 84x against an EPS growth profile of approximately 12%, a multiple Citi calls "unanchored from fundamentals."