How Risky Is Tesla Stock?
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Investors bracing for a market downturn will want to know how much further Tesla (TSLA) shares could fall. Shareholders have already lost ground, with the stock down 11.6% over the past twelve months while the S&P 500 gained 13.1%. So when the whole market has fallen before, how much harder was Tesla hit, and how long did it take to come back?
How Far Has Tesla Stock Fallen In Market Shocks?
Tesla has fallen far deeper than the market: across the shocks it has traded through since listing, the stock fell 30.7% on average, against 12.5% for the S&P 500 over the same dates, as measured by the SPY fund that tracks the index. The deepest of them was the COVID-19 shock of early 2020, when Tesla fell 61% while the S&P 500 fell 34%. Its largest fall at any time since listing was deeper still: 73.6%, from November 2021 to January 2023.
From its low in each shock, Tesla’s median time to regain its earlier high was 2.6 months. Yet three of its 12 recoveries took more than a year. The slowest followed the 2022 inflation shock, when Tesla fell 49% against 24% for the SPY fund. It took 25.9 months from that low to get back. Tesla has made back every one of those falls.
Tesla Is Bigger But Earns Less On Each Sale
While Tesla is bigger than it was four years ago and holds more cash than debt, the company keeps a much smaller share of its sales as profit. Revenue reached $104 billion over the twelve months to September 2026, up 8.3% from a year earlier. For the latest quarter, sales of $28.0 billion were level with the same period a year before.
The company’s operating margin shrank to 3.5% over the past twelve months, down from 16.7% four years earlier. That metric stood at 2.6% in the latest quarter, compared with 6.6% a year before. Looking at specific business segments, automotive sales declined 6.3% in 2025, while energy generation and storage sales rose 26.6%.
Tesla finished September 2026 holding $45.2 billion of cash and short-term investments, against $16.4 billion of debt.
What Risks Does Tesla Face Right Now?
The automaker faces weak sales in China, where its retail sales recently fell to their lowest level since July 2022. In the U.S., the regulator NHTSA opened a safety inquiry into Tesla’s Model Y robotaxis and Cybercabs in October, following a petition alleging the vehicles sped in an active school zone.
Management is spending heavily ahead of new products. On the October 21 call, it put 2026 capital spending at about $20 billion, to be funded mainly from operating cash flow. Tesla has also secured the ability to borrow up to $30 billion to support that spending, though management plans no draws on it in 2026.
Management said that operating expenses keep rising from quarter to quarter, mostly on research and development. This spending includes chip development and the costs of preparing new products such as Optimus, Megapack 3 and the Semi truck. Tesla expects that rise to continue until those products are sold commercially. Tesla’s operating margin is the number to watch when the company next reports, expected in January 2027.
How Much Tesla Does Your Index Fund Hold?
S&P 500 or Nasdaq-100 funds put much of their money in the largest stocks, Tesla among them. The Trefis High Quality (HQ) Portfolio holds 30 quality companies in equal weight and has returned 105% since its September 2020 launch.
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