Tesla stock sinks 2% on Monday as analyst suggests caution

Tesla shares attempted a rebound on Monday but failed to sustain momentum after last week’s disappointing delivery report.

The stock was down around 2% at $353.41 in early trading.

The broader market showed modest strength, with the Nasdaq up 0.3%, while the Dow Jones Industrial Average was flat.

Tesla shares had already declined 5.4% on Thursday ahead of the holiday weekend, following the release of first-quarter delivery figures that fell short of expectations.

Delivery miss and inventory build

Tesla reported deliveries of 358,023 vehicles in the first quarter, below Wall Street expectations of about 366,000 units.

The company also produced roughly 50,000 more vehicles than it delivered.

The resulting inventory build has raised concerns about future pricing pressure and potential production adjustments.

JPMorgan analyst Ryan Brinkman highlighted the issue in a note, stating that the “record surge in unsold vehicles adds to free cash flow woes.”

He noted that inventory ties up cash until it is sold.

Tesla has historically generated free cash flow, but that trend may not continue in the near term.

The company is expected to see negative free cash flow this year as capital expenditure rises sharply.

Spending is projected to reach about $20 billion, up from $8.5 billion last year.

Much of this investment is directed toward artificial intelligence initiatives, including robotics and other emerging technologies.

JPMorgan flags downside risks

JPMorgan reiterated its underweight rating on Tesla and maintained a $145 price target, implying significant downside from recent levels.

“We ... advise investors approach TSLA shares with a high degree of caution,” Brinkman said.

“Although both technology and execution risk seem substantially less than was once feared, expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition.”

The firm lowered its 2026 earnings per share estimate to $1.80 from $2, below consensus forecasts, after the delivery miss.

Brinkman added that while Tesla has a differentiated business model, strong product portfolio and leading technology, these positives are “more than offset by above-average execution risk, rising competition, growing controversy with regard to the brand, and valuation that seems to be pricing in a lot.”

Prolonged weakness in Tesla stock

Thursday’s decline marked Tesla’s seventh consecutive week of losses, with the stock falling about 14% over that period.

The downward trend began after the company reported better-than-expected fourth-quarter earnings in January.

Despite the strong results, the stock failed to gain traction, as investors looked for new catalysts.

Market participants are increasingly focused on Tesla’s AI-related opportunities, including autonomous vehicles and robotics, rather than near-term delivery performance.

Mixed analyst views persist

Not all analysts are equally cautious. Baird lowered its price target slightly to $538 from $548 while maintaining an Outperform rating.

The firm said weaker energy deployment figures could weigh on the stock in the near term.

It also noted that investor discussions have shifted away from core automotive metrics toward energy and broader strategic initiatives.

The divergence in views reflects the current positioning of Tesla.

While long-term expectations remain tied to AI and new business lines, near-term pressures from deliveries, inventory, and cash flow continue to weigh on sentiment.