Tesla (NASDAQ: TSLA) stock is struggling this year. Shares of the electric vehicle (EV) maker are down 23% thus far in 2026, recently falling to below $400. At a market cap of around $1.4 trillion, however, it’s still among the most valuable companies in the world. And it’s eyeing some monstrous growth opportunities involving robotaxis and humanoid robots.
Could the EV stock be a great buy while it’s trading below $400?
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Why has Tesla’s stock struggled so much this year?
This year is shaping up to be Tesla’s worst year since 2022, when its share price declined by 65%. The difference, however, is that back then, the stock market as a whole was doing poorly due to rising inflation; it wasn’t just Tesla that was struggling. This time around, the markets have been hot, and Tesla’s stock has remained in a tailspin.
Its problems, however, may not be much of a mystery. In fact, the issues plaguing the stock aren’t new. Competition is up, margins are shrinking, and investors are concerned about Tesla’s future growth. While it is focusing on robotaxis and plans to sell humanoid robots in the future, it could be years before those opportunities contribute significantly to its revenue, assuming they do at all, as there is no shortage of question marks ahead.
When Tesla reported its latest earnings, its net income declined by 5% despite generating strong top-line growth of 26% — not a good sign. Meanwhile, its valuation remains high.
Tesla’s stock is still not cheap enough to offset the risk ahead
Unfortunately, because Tesla has been trading at an extremely high valuation for some time, even this seemingly large pullback in value isn’t enough to make it an attractive buy, particularly when investors consider the risks and uncertainties ahead for the business. Even based on analysts’ earnings expectations for the year ahead, Tesla’s stock is trading at an extremely high forward price-to-earnings multiple of more than 170.
Tesla’s stock gives investors no margin of safety, even at this reduced price. The stock is simply not as grossly overvalued as it was earlier in the year, but it’s still expensive. And its reduced valuation just isn’t enough to make it a compelling buy, as it could easily drop further in the weeks and months ahead. Truthfully, even if it were to fall below $300, I still wouldn’t be tempted to buy it.
