Tesla shares have experienced a notable 12% rebound, closing around $282 after a significant sell-off that saw a 55% drop over two months. This recovery follows a dip below long-term support at $221, raising questions about its sustainability amidst ongoing fundamental concerns.
Recent data indicates that Tesla’s vehicle sales in the EU have decreased for two consecutive months, suggesting that brand damage is substantially affecting demand. This decline coincides with protests and boycotts in countries such as Germany and France, where public trust in Musk has waned.
Earnings Performance Concerns
The company’s earnings track record raises further apprehension, with it missing revenue expectations in five of the last six quarters. A gap of $1.55 billion in Q4 2024 signifies a potential erosion of Tesla’s market dominance.
Current resistance levels include $275.70 and $284.00, with several higher zones identified if momentum continues. Conversely, a failure to maintain levels above $275.70 could result in a decline towards $263 and possibly $221.
While Tesla’s rebound is substantial, caution is warranted. The necessity for the company to stabilise its earnings and rebuild brand trust remains paramount for any long-term positive trend. The $284 resistance point will be critical in determining the future trajectory of its stock.
What we are seeing with Tesla’s stock is a sharp move upward after a lengthy decline, which often prompts traders to assess whether this is the start of a broader recovery or merely a temporary reaction. The fact that shares had fallen below a well-established support level at $221 before bouncing back suggests a mix of technical factors and market sentiment at play. While the rebound is strong in percentage terms, the wider concerns about demand, earnings, and investor confidence remain unresolved.
Looking at demand, the drop in EU vehicle sales for two consecutive months raises a flag. Over time, we have seen external controversies affect global brands to varying degrees, and the ongoing protests and boycotts in places like Germany and France indicate that this could be an ongoing challenge. If demand continues to soften, there will be unavoidable pressure on revenue, which, as Lutz highlighted, has consistently fallen short of market expectations. Missing earnings forecasts in five out of six quarters is not an isolated issue but rather a pattern that traders are likely scrutinising. The Q4 shortfall of $1.55 billion reinforces the notion that maintaining its past levels of market share is getting progressively harder.
On the technical front, the zones around $275.70 and $284.00 will be watched carefully. Trading behaviour at these levels can inform decisions about positioning, as a sustained hold above them may signal further moves higher, whereas a drop below could suggest that recent strength was fleeting. The lower supports at $263 and $221 come back into focus if momentum weakens. For those navigating the derivatives market, volatility here presents both risks and opportunities.
Key Resistance Levels
The discussion about the $284 barrier being a pivotal test is more than just a number on a chart. If the stock convincingly clears that level and holds, short sellers may be forced to adjust their positions. However, if the price stalls and retreats, it may reinforce the idea that structural issues are outweighing any technical bounce. Until there is a clear signal of earnings stabilisation and demand recovery, sentiment will remain fragile.
