Tesla’s stock slumped on Monday, falling more than 3% in morning trading. This comes after a strong recovery in recent weeks, with the stock gaining over 40% in the past month. The decline appears to be driven by concerns about Tesla’s sales figures, particularly in the critical Chinese market.
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Registration data indicates that Chinese sales plunged about 26% in April and the first half of May, a sharp decline from the roughly flat sales seen in the first quarter. This trend is worrying investors, who may be selling the stock in anticipation of further poor sales results. With sales also plummeting in many European markets, the Chinese market’s performance is becoming even more critical for Tesla’s global strategy.
Investors are eagerly awaiting the next report from the China Passenger Car Association (CPCA).
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Tesla investors worry over China sales
If it fails to show a major turnaround, Tesla’s stock may continue the decline that began today.
Tesla shares have been on an upward trend after breaking out above the neckline of a triple bottom pattern earlier this month. However, the price has recently consolidated as investors assess the stock’s next move. Key support levels to watch on Tesla’s chart are around $289 and $271, while important resistance levels are near $430 and $489.
Despite the minor retracement, the Relative Strength Index (RSI) remains just below the overbought threshold of 70, confirming bullish price momentum. If the current uptrend resumes, Tesla shares could initially climb to around $430, where the stock may encounter overhead selling pressure near the mid-January peak and the stock’s first minor pullback after setting its record high in mid-December. Further upside could fuel a rally toward the $489 level, where investors who have purchased shares at lower prices may consider selling, especially if other technical indicators are confirming overbought conditions at the same time.