Tesla stock fails to rebound even as broader market rockets: here's why

Tesla shares attempted a rebound on Wednesday but failed to sustain gains, remaining largely flat at $347.41 in early trading.

The muted move contrasted with a sharp rally in broader markets.

The S&P 500 surged 2.6%, while the Dow Jones Industrial Average jumped 1,384 points, or 2.9%. The Nasdaq Composite rose 3.3%.

The rally followed comments from Donald Trump, who said he would suspend military action against Iran for two weeks.

“I agree to suspend the bombing and attack of Iran for a period of two weeks,” Trump said, adding that a ceasefire would depend on reopening the Strait of Hormuz.

Oil prices fell sharply on the news. West Texas Intermediate crude dropped more than 17% to $93.42 per barrel, while Brent crude declined over 16% to $91.65.

Tesla stock remains under pressure

Despite easing geopolitical tensions, Tesla shares have struggled.

The stock is down about 14% since the conflict began and has failed to benefit from earlier rises in gasoline prices, which historically supported electric vehicle demand.

Tesla shares are down around 20% for the year, though still up 57% over the past 12 months.

A key factor behind the weakness is declining sales. Tesla deliveries fell in both 2024 and 2025, reflecting increased competition and an ageing product lineup.

Demand has also been affected by the expiration of the $7,500 US federal EV tax credit and expectations of further declines in EV sales in 2026.

Weak results highlight demand challenges

Tesla’s first-quarter performance reinforced concerns about demand.

The company’s delivery figures came in below expectations, while efforts to stimulate sales through discounts and promotions had limited impact.

Ryan Brinkman pointed to inventory as a key issue. “The record surge in unsold vehicles adds to free cash flow woes,” he said, noting that excess inventory ties up capital.

He added, “We ... advise investors approach TSLA shares with a high degree of caution,” citing risks related to demand, execution, and competition.

JPMorgan maintained an underweight rating with a $145 price target and lowered its 2026 earnings forecast.

Investor Bill Maurer also highlighted concerns about weakening expectations.

“The Q1 numbers announced Thursday were not good, to say the least, and that will only fuel demand questions even further moving forward. Investors were already on edge about Tesla’s huge spending plans for this year, and the latest news will increase concerns about the company’s near-term future,” Maurer said.

AI ambitions and SpaceX link in focus

Investor attention is increasingly shifting toward Tesla’s artificial intelligence strategy.

The company is expanding into robotics, autonomous driving, and broader AI applications.

Speculation has also grown around closer ties between Tesla and SpaceX, which recently filed confidentially for an initial public offering and was last valued at $1.25 trillion.

Tesla itself has a market value of about $1.1 trillion.

Some investors have floated the idea of a potential merger between the companies, though Elon Musk has not commented on such speculation.

Recent joint initiatives include a shared chip manufacturing project, Terafab, and the development of an AI agent known as Digital Optimus.

Musk has also outlined a broader vision linking Tesla’s AI ambitions with SpaceX’s plans for space-based data centres powered by solar energy.