Why Tesla stock is crashing around 3% on Monday

Shares of Tesla fell more than 3% on Monday to $365.12, underperforming a relatively subdued broader market.

The move comes as investors continued to digest the company’s recent earnings and reassess its long-term growth narrative.

The S&P 500 and the Dow Jones Industrial Average were down 0.1% and 0.2%, respectively.

Post-earnings weakness extends

Tesla shares have come under renewed pressure following last week’s earnings report.

The stock declined 6.1% over the past week, despite the company reporting better-than-expected bottom-line profits.

The primary source of investor concern has been the slower-than-anticipated rollout of Tesla’s robotaxi service, which remains central to its long-term artificial intelligence strategy.

Coming into Monday’s session, Tesla stock was down 16% year-to-date, though it remains up 32% over the past 12 months.

Musk stock registration adds focus on potential supply

Separately, Tesla disclosed a filing with the US Securities and Exchange Commission registering approximately 304 million shares tied to Chief Executive Officer Elon Musk’s 2018 compensation award.

The filing does not indicate an immediate sale but allows shares to become freely tradable once the options are exercised.

The compensation package, originally approved by shareholders, faced legal challenges after a Delaware judge voided the award in 2024, citing inadequate disclosures.

Shareholders later reapproved the package, and in 2025, the Delaware Supreme Court upheld the award, preserving Musk’s options.

To qualify for the compensation, Tesla needed to achieve a valuation of $650 billion—a target it has significantly exceeded, with the company now valued at approximately $1.7 trillion on a fully diluted basis.

While the registration itself does not trigger share sales, it raises the prospect of future selling activity when Musk exercises the options, which are set to expire in early 2028.

Such exercises typically result in partial stock sales to cover tax liabilities, as seen in 2021 when Musk sold shares following the exercise of earlier options.

These transactions have historically contributed to volatility in Tesla’s stock.

AI progress remains key driver

Investor sentiment continues to be shaped by Tesla’s progress in artificial intelligence, particularly in autonomous driving and robotics.

Although the company is investing heavily in these areas, progress has been slower than expected, raising questions about the timeline for generating meaningful revenue from AI-driven initiatives.

The robotaxi rollout, in particular, has become a focal point for investors seeking evidence that Tesla can translate its technological ambitions into scalable business models.

At the same time, Tesla’s core electric vehicle business is encountering challenges following the expiration of the federal $7,500 tax credit, reducing demand across the sector and adding pressure on Tesla’s automotive segment.

Outlook hinges on execution

Tesla’s recent share price performance reflects a broader tension between its current financial results and its long-term growth expectations.

While profitability remains resilient, investors are increasingly focused on execution risks, particularly around AI development and deployment.

With both technological progress and potential stock-related developments in focus, Tesla’s trajectory in the near term is likely to remain closely tied to investor confidence in its ability to deliver on its ambitious roadmap.