Tesla Stock Plummets 12% After Disappointing Earnings Report
Tesla shares plunged 12% in premarket trading Thursday after the electric vehicle maker reported weaker-than-expected first-quarter earnings. The drop erased nearly $80 billion from Tesla's market value as investors reacted to slowing growth and shrinking profit margins.
The company reported revenue of $22.1 billion for Q1 2026, missing analyst estimates of $23.4 billion. Earnings per share came in at $0.78, well below the projected $1.02. This marks Tesla's third consecutive quarter of declining profitability.
CEO Elon Musk acknowledged challenges during Wednesday's earnings call, citing "significant production bottlenecks" at Tesla's new Texas and Berlin factories. The company also faced softer demand for its Model 3 and Model Y vehicles amid rising competition from legacy automakers.
Tesla's stock decline is dragging down the broader EV sector, with Rivian and Lucid both falling over 5% in early trading. The selloff comes just weeks after Tesla announced layoffs affecting 10% of its global workforce.
Analysts at Morgan Stanley downgraded Tesla from "Overweight" to "Equal Weight" following the earnings miss. "The growth story is showing cracks," wrote analyst Adam Jonas in a research note Thursday morning.
The stock drop is particularly painful for retail investors, who own about 43% of Tesla shares. Many took to social media to express frustration, with #TeslaStock trending on Twitter/X as of 8:30 AM ET.
Tesla's decline comes during a turbulent week for tech stocks, with the Nasdaq Composite already down 3% since Monday. The EV maker's shares have now fallen 32% year-to-date, underperforming both the S&P 500 and the automotive sector.
Industry experts note Tesla faces mounting pressure as traditional automakers ramp up EV production. Ford and GM both reported stronger-than-expected electric vehicle sales this week, further squeezing Tesla's market share.
The company maintained its 2026 delivery guidance of 2.1 million vehicles, but many analysts now view that target as increasingly ambitious. Tesla will need to demonstrate improved execution in coming quarters to regain investor confidence.
Thursday's trading session could see particularly high volume, with over 150 million Tesla shares changing hands in premarket activity alone. The stock last traded at $148.50, its lowest level since January 2025.
