© Win McNamee / Getty Images News via Getty Images
Tesla (NASDAQ:TSLA) has shown that the stock has the ability to defy gravity, even though the underlying business may not be humming like it used to. Shareholders refuse to budge and are willing to back up the truck as long as Elon Musk has promises to make. It has so far proved all the bears wrong and has climbed well above its 2021 peak.
Sales growth has slowed down considerably, and profits are in reverse. TSLA stock has still rallied for nearly two years straight, and even the public spat between Musk and Trump didn’t stop it from bouncing right back as they mended their relationship.
What happens to TSLA stock in 2026 is binary: either the stock keeps proving the bears (and basic valuation philosophy) wrong this year, or it will undergo a long and overdue correction.
No one can guarantee which one it will be, as the broader market will be the heaviest thumb on the scale. However, what you can do is look at all the variables at play, the trends, and then decide where TSLA stock may end up by the end of this year.
Let’s try to do just that.
What’s going right and what’s going wrong
Things are moving in the right direction for Tesla, even though it is not as fast as bulls would like. Interest rates are coming down, and this is one variable that will greatly impact the demand for electric vehicles. Lower interest rates make it much cheaper to finance a car, thereby translating into significantly higher demand for Teslas. The company’s best years were when interest rates were at their lowest.
On the flip side, renewables aren’t as trendy anymore, and government support for EVs has slumped. There are no more EV tax credits, and countries that still provide support to EVs have seen their populations boycott or avoid Tesla when buying one.
Interest rates are unlikely to return to near-zero levels anytime soon. A 2% interest rate may take years to get to, with 3% being likely if the Fed keeps cutting in 2026. That slight decrease in rates is unlikely to offset all the negatives. Analysts expect growth to remain low through 2026, with full-year revenue growth being just over 13% after a 3% decline in 2025.
The bulls are not giving up on Tesla
Tesla bulls have staunchly backed Tesla even when things looked hopeless this spring. Now that things are looking up again, they’re not going to back down. Vocal bulls like Cathie Wood argue that the auto business no longer matters as much, with robotaxis and AI robots playing a bigger role in valuing the company.
The argument is that robotaxis will generate explosive revenue growth if all the Teslas on the road can drive themselves and start generating revenue while their owners are not using them. You’ll essentially have an automated network that can be used for ride-sharing and other services.
Optimus robots will also be game-changing, if they’re ever figured out, of course. Most are still remotely-controlled at events, though the premise of a $30k robot doing everyone’s chores does sound like something that would fly off shelves very quickly.
Does the auto business really matter anymore?
Robotaxis certainly would boost Tesla if the company can figure out full self-driving. A working robotaxi network flips Tesla from a low-margin hardware maker to a high-margin platform that clips a toll on every ride. The average privately-owned car sits idle ~95% of the time. A robotaxi that is out earning even 12 hours a day turns the same asset into a cash-flow machine while generating data.
Unfortunately, crash rate data show Tesla’s camera-only stack crashing ~12 times as often as human drivers so far. Most people feel unsafe in these cars, and nationwide adoption is not happening anytime soon. Only a fraction have bought the limited FSD Tesla is selling, and Musk changed that to a $99 subscription to compel more usage.
In short, the argument is conceptually sound but priced as if the leap from demo to mass-scale profitability has already happened. Until Tesla (or anyone) shows operating profit at the fleet level and clears the regulatory gauntlet, the auto business very much matters.
Where I see TSLA stock in 2026
As long as the crowd buys the promise, the stock is unlikely to crash back to earth. I expect 2026 to be another year where narrative beats numbers. The stock is plateauing at the moment near $437 and can correct to $400 or $380. Tesla now comprises 4.3% of the Nasdaq and 2.3% of the S&P 500. Every $1 that goes into a broad-market 401(k) automatically buys some Tesla.
Thus, I don’t see TSLA stock going down to $300 as long as the broader market is rallying. $600 is more likely for 2026, but not by a long shot. If the market tanks as it did in the spring last year, Tesla would be one of the first to decline 30-50%.