The three-day rebound follows a more than 20% post-earnings slide as investors weigh weak second-quarter margins against CEO Elon Musk's push into FSD, robotaxis and Optimus.
Tesla shares rose for a third straight session on Monday, gaining 3.5% to $322.08 even as the National Highway Traffic Safety Administration, or NHTSA (U.S. auto safety regulator), opened a preliminary probe into about 1.2 million vehicles over suspension complaints. The move outpaced the S&P 500's 1.5% gain and the Dow Jones Industrial Average's 1.3% advance, suggesting investors are treating the investigation as a routine auto-sector risk rather than a major change in the case for the stock. That resilience comes after Tesla briefly fell below $300 last week for the first time in more than a year, following a six-day losing streak that erased more than 20% after its July 22 second-quarter earnings report. The market's focus appears to be shifting toward Tesla's artificial intelligence ambitions, especially Full Self-Driving, or FSD (driver-assistance software), its planned robotaxi service and the Optimus humanoid robot, even though the latest quarter showed mounting financial strain. Tesla posted record revenue of $28.24 billion and record deliveries of 480,126 vehicles, but adjusted earnings of $0.33 a share missed estimates of $0.55, operating profit fell to about $400 million, operating margin dropped to 1.4%, and free cash flow turned negative $1.09 billion as capital spending jumped 142% to $5.79 billion. The company also raised its 2026 capital expenditure guidance to $25 billion to support AI, robotaxi and robotics projects. Analysts and investors remain split: David Wagner of Aptus Capital Advisors pointed to the tension between near-term numbers and a long-term AI story, while Bill Birmingham of REX Shares said the delivery beat did not translate into operating leverage. Stifel Nicolaus analyst Stephen Gengaro cut his price target to $491 from $508 but kept a buy rating, citing weaker profitability while still seeing progress in FSD and robotaxi development and a strong order backlog. Wall Street's consensus remains Hold, with 10 buys, 15 holds and 3 sells over the past three months, while the average price target of $382.65 implies about 18.8% upside. Whether that optimism holds may depend on Tesla's ability to execute on its expansion plans while absorbing the cost of heavy investment.