- Tesla stock price has dropped by over 30% from its highest point in 2025.
- The company recently published weak vehicle delivery numbers.
- TSLA stock has formed a falling wedge pattern, pointing to a strong rebound.
Tesla stock price has plunged into a bear market this year and is now loitering at its lowest level since September last year. It has underperformed the broader market, while the S&P 500 and Dow Jones are hovering near all-time highs.
Despite its challenges, there is a likelihood that TSLA stock will rebound after its earnings next week.
Tesla is Facing Headwinds, But Potential Catalysts Remain
TSLA stock price crashed after the company reported weak deliveries earlier this month, prompting more investors to downgrade it. Its deliveries dropped 358k vehicles, down by 6% from the same period last year. The company produced 408k vehicles, leaving a 50k gap, its widest in years.
As a result, some analysts decided to downgrade the stock, with JP Morgan being the most brutal. In a note, the biggest American bank said that:
“We continue to see a large -60% downside to our $145 December 2026 price target and advise investors to approach TSLA shares with a high degree of caution.”
The weak delivery numbers mean that the upcoming report on August 22nd will show that the company missed its guidance. Yahoo Finance data shows the average estimate is $22.8 billion in revenue, up 18% YoY.
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Tesla stock also faces a major valuation issue, as the company trades at a forward PE ratio of 172, much higher than the S&P 500 Index, which is expected to grow earnings by 17%, the highest level in years. Tesla is also more expensive than a company like Nio, which has seen a sharp acceleration in sales.
Despite the challenges, the company has several major catalysts ahead, including the upcoming launch of a smaller, cheaper SUV that will start selling in China. This launch comes after Elon Musk scrapped plans for a low-cost EV in 2024 to focus on robotaxis and humanoid robots.
The most notable catalyst is that Tesla’s sales have started rising in key markets, such as Europe, where they tumbled for months. Tesla shares may also benefit ahead of the upcoming SpaceX IPO, thanks to its small stake in the company through its initial investment in xAI.
Tesla Stock Price Falling Wedge Points to a Rebound
The daily timeframe chart shows that TSLA stock has plunged sharply over the past few months and is underperforming other EV companies.
It has dropped below the 50% Fibonacci Retracement level at $360. Also, it has remained below all moving averages, a sign that bears remain in control.
On the positive side, the stock has formed a giant falling wedge pattern, a pattern composed of two descending, converging trendlines.
The stock will likely have a strong bullish breakout in the near term, potentially to the 23.6% Fibonacci Retracement level at $433. A move above that price will point to more gains, potentially to the all-time high of $503.
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