Tesla (NASDAQ: TSLA) shares fell more than 3% on Monday, trading at $393.56, as a broader market downturn fueled by renewed geopolitical tensions overshadowed positive analyst revisions and strong second-quarter delivery figures.
The decline came as President Donald Trump announced the reinstatement of what he termed a blockade on Iranian shipping through the Strait of Hormuz, a move that rattled investor sentiment across global markets. The S&P 500 slipped 0.4%, the Nasdaq Composite lost 1%, and the Dow Jones Industrial Average dropped 132 points, or 0.3%.
Market Pressure from Geopolitical Headwinds
The broader selloff provided a headwind for Tesla, which had been riding a wave of optimism following better-than-expected second-quarter deliveries. The company reported 480,126 vehicle deliveries for the quarter, including 467,800 Model 3 and Model Y units, well above the consensus estimate of roughly 410,000 vehicles.
However, the geopolitical uncertainty shifted investor focus away from Tesla's operational momentum and back toward macroeconomic risks that could impact demand and supply chains.
Investors Eye AI Progress Amid Robotaxi and Optimus Rollout
Beyond the macro backdrop, Tesla investors remain focused on the company's artificial intelligence strategy, particularly the commercialization of its autonomous robotaxi service and the Optimus humanoid robot. The robotaxi service launched in Austin, Texas, in June 2025 and has since expanded to several cities, though its fleet size remains significantly smaller than Alphabet's Waymo.
On the robotics front, Tesla released a video on Friday showing the decommissioning of Model S and Model X production lines at its Fremont, California, facility. The company said the process took less than 50 days, freeing up capacity for Optimus production while continuing to manufacture Model 3 and Model Y vehicles. Tesla announced in January that it would discontinue the Model S and Model X to repurpose manufacturing space for robots.
CEO Elon Musk has described humanoid robots as a multi-trillion-dollar opportunity, but investors are still awaiting updates on the latest version of Optimus. The company is expected to provide more details during its second-quarter earnings call on July 22.
For more context on Tesla's recent delivery performance and AI-driven volatility, see Tesla Slips 2% as AI Ambitions, SpaceX Merger Hurdles Overshadow Strong Deliveries.
Wall Street Analysts Raise Price Targets
Despite Monday's decline, several analysts have raised their price targets on Tesla following the strong delivery report. Jefferies increased its target to $400 from $375 while maintaining a Hold rating, citing the delivery beat. The firm raised its second-quarter EBIT estimate to $1.45 billion (5.1% margin) and its automotive revenue forecast to $21 billion, including $250 million in zero-emission vehicle credits and $500 million in leasing revenue. Jefferies now expects total group revenue of $28.7 billion for the quarter.
Earlier this month, RBC Capital raised its price target to $500 from $475, incorporating a premium tied to a potential merger with SpaceX. Analyst Tom Narayan noted that the revised target reflects a 25-30% premium to current trading levels, partly due to unconfirmed media reports of a possible all-stock acquisition of Tesla by SpaceX at a 20-30% premium. Excluding any merger premium, RBC values Tesla at $435 per share.
RBC also highlighted that Tesla's robotaxi segment represents the company's most robust opportunity within a $4.2 trillion total addressable market, increasing its segment valuation by 20%.
For a deeper dive into the potential implications of a Tesla-SpaceX merger, read JPMorgan: Tesla-SpaceX Merger 'Strategically Coherent' but Not a Buy Signal.
Meanwhile, the company's robotaxi expansion continues to draw attention. See Tesla Rebounds 3% on Miami Robotaxi Launch and Strong Q2 Deliveries for details on recent service launches.
This article is for informational purposes only and does not constitute financial advice.
