It’s a ‘Vulnerable Time’ for Tesla Stock After Its Latest Earnings Report

Tesla (TSLA) shares are falling in premarket trading, with a lackluster second-quarter earnings report weighing on the shares.

The electric vehicle maker’s revenue and profits both declined for a second straight quarter, according to results posted last night, as Tesla has seen sales decline in key markets like the U.S. and China. The stock, which has lost nearly a fifth of its value this year, is about 6% lower in premarket trading today.

Data from California and the European Union illustrated the pressure on Tesla’s EV business. Tesla sales declined nearly 40% year-over-year in the EU for June, according to recent figures, while more than 20% fewer new Teslas were registered in California in the second quarter than at the same time a year earlier.

Musk said Wednesday that Tesla could face a “few rough quarters” as the Trump administration axes electric vehicle tax credits later this year. The credits made EVs more affordable to a wider range of consumers, so Tesla could see demand fall after they go away, though Musk said he expects demand to once again improve once Tesla has more advanced self-driving software to sell along with its cars.

“We are entering a vulnerable time for Tesla, as near-term headwinds, like auto and energy demand, subsidy cuts, and tariffs, pressure financials in the crucial transition to the long-term vision of real-world AI and higher-margin products like robotaxi and optimus,” William Blair analysts said in a Thursday note. The analysts recently downgraded Tesla stock.

JPMorgan analysts, who have a Street-low $115 price target, said Thursday that they “remain highly cautious” on Tesla’s valuation as they expect analysts to reset estimates as Tesla continues to fall short of Street expecations.