Tesla shares tumbled 2.3% in Monday’s trading session after JPMorgan Chase significantly slashed its earnings per share (EPS) forecast for the electric vehicle maker. The downgrade highlights growing concern over Tesla’s ability to maintain profitability amid intensifying industry headwinds.
JPMorgan’s EPS Revision: Key Details
JPMorgan lowered its 2026 EPS estimate for Tesla from $3.50 to $2.80, representing a 20% cut. In a research note, analyst Ryan Brinkman cited rising competition from Chinese EV makers, elevated raw material costs, and softening consumer demand due to macroeconomic uncertainty. He warned that Tesla’s aggressive price cuts—which have eroded margins—may not be sufficient to defend market share.
Market Reaction: Options Volume Spikes
Shares hit a session low of $215.40 before closing at $218.10. Trading volume surged 35% above the 20-day average, with put option open interest rising notably. The $210 strike put contract saw a 12% increase in open interest, indicating that some traders are positioning for further declines ahead of Tesla’s Q2 earnings report due on July 20.
Wall Street Divided: Cautious vs Optimistic
Morgan Stanley maintained an “overweight” rating but cut its price target from $310 to $290, citing near-term margin pressure. In contrast, Goldman Sachs reiterated a “buy” rating, arguing that Tesla’s long-term advantages in autonomous driving and energy storage remain intact. However, CEO Elon Musk’s recent stock sales—totaling $4.5 billion—have exacerbated investor unease.
Broader Industry Context
Global EV sales growth slowed to 8% year-over-year in Q2 2026, down from 35% a year ago. The Federal Reserve’s hawkish stance has raised borrowing costs, discouraging big-ticket purchases. Meanwhile, Chinese rivals like BYD and NIO are expanding aggressively in Europe, directly competing with Tesla’s Model 3 and Model Y. JPMorgan’s EPS downgrade reflects these cumulative pressures.
Tesla’s market cap slipped below $700 billion, bringing year-to-date losses to 22%. All eyes are now on the July 20 earnings release: if actual results fall short of the already-lowered consensus, the stock could face another leg down.