Tesla Inc. (NASDAQ: TSLA) shares declined 3.2% on Monday, February 23, 2026, closing at $348.12 after trading in a range of $345.80 to $357.45. The drop came as investors digested the company's fourth-quarter 2025 delivery figures released earlier in February and weighed ongoing uncertainty around production ramps, competition in electric vehicles, and CEO Elon Musk's shifting priorities toward artificial intelligence and humanoid robotics.

Tesla's robotaxi launch in Texas comes as Elon Musk focuses on his business ventures following his stint in Washington
AFP

Tesla's market capitalization stood at approximately $1.11 trillion at Monday's close, down from peaks above $1.3 trillion in late 2025. The stock has gained roughly 4% year-to-date in 2026 but remains volatile, trading about 28% below its all-time high of $488.54 (split-adjusted) set in December 2024. Average daily volume has hovered around 85-90 million shares in recent sessions, reflecting continued retail and institutional interest despite a cooling in the meme-stock fervor of prior years.

The latest catalyst was Tesla's Q4 2025 production and delivery report, issued February 2, 2026. The company produced 495,570 vehicles and delivered 484,507 — both figures below Wall Street consensus estimates of approximately 510,000-515,000 deliveries. Full-year 2025 deliveries totaled 1.81 million vehicles, marking the first annual decline since 2011 and falling short of Musk's earlier goal of 20-30% growth. The shortfall was attributed to factory retooling for refreshed Model Y production, softer demand in Europe and China, and intensified competition from BYD, Rivian, and legacy automakers.

Despite the miss, Tesla maintained strong profitability metrics. Adjusted operating income reached $3.2 billion in Q4, with automotive gross margins holding above 18% excluding regulatory credits. Energy storage deployments surged 157% year-over-year to 11.0 GWh, underscoring growth in the Megapack and Powerwall businesses. Free cash flow remained positive at $2.1 billion for the quarter, supported by a cash position exceeding $33 billion.

Musk used the earnings call to pivot attention toward future growth drivers beyond EVs. He reiterated that Optimus, Tesla's humanoid robot, represents "the biggest product opportunity in history" and projected millions of units annually within five years. The company showcased Optimus performing household tasks at the "We, Robot" event in October 2025 and confirmed limited production for internal use in 2026, with external sales targeted for 2027. Musk also highlighted progress on Full Self-Driving (FSD) software, with version 13.2 rolling out to more users and unsupervised driving demos in Texas and California.

Analyst reactions were mixed. Morgan Stanley maintained an Overweight rating with a $430 price target, citing robotics and AI as transformative long-term catalysts. Wedbush kept an Outperform at $515, emphasizing energy storage and autonomy upside. However, GLJ Research reiterated a Sell rating with a $23 target, arguing that current valuation assumes flawless execution on unproven initiatives while core EV growth slows. Consensus price target sits around $385-390, implying 10-12% upside from current levels, with ratings split roughly 60% Buy, 30% Hold, and 10% Sell.

The stock's recent weakness aligns with broader EV sector pressures. Global electric vehicle sales growth has moderated in 2025-2026, with incentives phasing out in some markets and charging infrastructure still lagging in others. Tesla faces heightened competition in China, where BYD overtook it as the world's largest EV seller by volume in 2025. Price cuts implemented in late 2025 and early 2026 helped stabilize demand but compressed margins.

Tesla's energy business continues to shine as a bright spot. Megapack deployments are scaling rapidly, with new factories in Shanghai and Texas coming online. The segment posted record profitability in Q4, with gross margins exceeding 30%. Analysts project energy storage could contribute 15-20% of total revenue by 2027-2028 if current trends hold.

Regulatory and legal headwinds persist. The National Highway Traffic Safety Administration continues investigating FSD-related crashes, while multiple class-action lawsuits allege misleading statements about autonomy timelines. Musk's political involvement, including his role in the Department of Government Efficiency (DOGE) under President Trump, has sparked debate about potential conflicts of interest and regulatory favoritism.

Looking ahead, Tesla's next major update is the Q1 2026 production and delivery report expected in early April. Wall Street anticipates around 420,000-440,000 deliveries for the quarter, reflecting seasonal softness and ongoing Model Y refresh impacts. The earnings call, scheduled for late April, will provide further color on Optimus timelines, Robotaxi progress, and energy growth.

For now, Tesla stock trades at a forward P/E of approximately 80-90x consensus 2026 EPS estimates of $3.80-$4.00, well above traditional automakers but justified by bulls as a bet on AI, robotics, and energy rather than pure EV sales. Bears argue the multiple leaves little room for error if autonomy or humanoid timelines slip.

As February 2026 draws to a close, Tesla remains a high-conviction, high-volatility name. Its trajectory hinges on execution across multiple moonshot bets — from FSD and Robotaxi to Optimus and energy storage — while navigating a maturing EV market and macroeconomic crosscurrents.