Why Tesla stock is crashing around 5% today

Tesla stock TSLA plunged around 5% on Tuesday, giving back much of the previous session's gains as a broader selloff in technology and semiconductor stocks weighed heavily on investor sentiment.

The electric-vehicle maker's stock had surged roughly 4.5% on Monday but reversed sharply as risk appetite faded across the market.

US equities broadly declined on Tuesday despite lower oil prices.

The S&P 500 fell 1.3%, while the Nasdaq Composite dropped 2.1%. The Dow Jones Industrial Average lost 279 points, or 0.6%.

The weakness was particularly pronounced across technology and semiconductor stocks.

The iShares Semiconductor ETF fell 5%, erasing much of Monday's 6% rebound.

The sector remains under pressure after a steep selloff last week, when the ETF plunged 10% on Friday, its worst daily decline in six years, amid concerns that enthusiasm surrounding artificial intelligence-related stocks had become excessive.

Micron Technology fell more than 6% after rallying 10% on Monday, while Broadcom dropped nearly 5% as investors continued to reassess semiconductor valuations following last week's sharp swings.

Some investors may also be turning cautious ahead of the anticipated initial public offering of Elon Musk's SpaceX, which has attracted significant attention from institutional and retail investors.

While Tesla and SpaceX are separate companies, both remain closely associated with Musk, and some market participants may be reassessing their exposure to Tesla as capital and investor focus potentially shift toward what could become one of the most closely watched public listings in recent years.

Analysts update Tesla outlook

Amid the market volatility, Wolfe Research reiterated its Peerperform rating on Tesla while updating its financial forecasts for the company, as per an Investing.com report.

The firm raised its 2026 earnings-per-share estimate to $1.89 from $1.62, although the revised figure remains slightly below the broader consensus estimate of $1.93.

At the same time, Wolfe Research lowered its 2027 earnings forecast to $2.04 per share from $2.17.

The reduction was primarily attributed to expectations for higher depreciation, amortization, and operating expenses.

The revised estimate remains below the consensus forecast of $2.46.

Wolfe Research also increased its 2026 vehicle delivery forecast by approximately 15,000 units to 1.69 million vehicles, representing projected growth of about 3% year over year.

The firm highlighted continued expansion in Tesla's software business, noting that Full Self-Driving subscriptions increased 16% quarter over quarter and 51% year over year during the first quarter.

Its forecast assumes Tesla will reach approximately 1.7 million Full Self-Driving subscriptions in 2026, representing roughly 50% year-over-year growth.

Denmark approves FSD rollout

Tesla also received a regulatory boost in Europe after Denmark's Road Traffic Authority, Færdselsstyrelsen, granted provisional approval for the company's Full Self-Driving (Supervised) driver-assistance system.

The approval allows Tesla to begin rolling out the software to eligible customers through over-the-air updates starting June 10.

Danish regulators emphasized that FSD (Supervised) remains a Level 2 driver-assistance system and does not make vehicles autonomous.

Under the approval, drivers must remain attentive, monitor the vehicle at all times, and be prepared to take control whenever necessary.

The authority said the authorization is subject to specific regulatory conditions and ongoing oversight.

The approval marks another step in Tesla's broader effort to expand Full Self-Driving availability across Europe following assessments conducted under European regulatory procedures for advanced driver-assistance systems.

While the regulatory development represents progress for Tesla's autonomous driving ambitions, it did little to offset the broader risk-off mood in markets on Tuesday.

Investor attention remains focused on Tesla's long-term artificial intelligence strategy, including Full Self-Driving software, robotaxi services, and humanoid robotics initiatives, all of which continue to play an increasingly important role in the company's valuation narrative.