Tesla Stock Price Returns to the Upside, But Two Key Risks Will Limit Gains

Summary:
• Tesla stock price has risen by more than 70 percent since Donald Trump won the US presidential elections, but are there underlying risks?

Tesla stock price traded upward in Monday’s pre-market session, signaling a potential end to its recent slump. The stock was at $429.58 at the time of writing, with gains of 2% on the daily chart, signaling an end to its its three-day loss-making streak. Tesla is still riding on the Trump-fuelled rally, but there’s an underlying risk of consolidation driven by profit-taking.

Profit taking and sales figures pose risk

The EV maker has seen its stock price rise by 22% in the last month, and is up by 68% year-to-date. However, many investors have already prized in the impact of Donald Trump’s presidency. That could limit the upside in the coming weeks. Also the company’s quarterly sales figures will be under scrutiny and could impact the long-running upbeat sentiment.

Analysts project that Tesla (NASDAQ: TSLA) will deliver 515,000 in Q4 2024. That would be record deliveries in a single quarter and would also make 2024 the company’s best year in terms of sales. Also, the company’s performance in China will be in sharp focus, in view of the tight competition seen from the country’s EV manufacturers like BYD, Li Auto and Xpeng.

Also, declining sales in Europe are a cause for concern. According to a recent report by European Automobile Manufacturers Association, Tesla’s sales in its third-largest market tanked by 14% in the eleven months to November. Therefore, potential gains in China could be offset by a decline in European EV sales, which could bring headwinds to Tesla stock price.

Tesla stock price prediction

Tesla stock price pivot is at $428, and action above that level will signal bullish control. Otherwise, the downside will prevail. The RSI indicator signals control by the buyers as seen on the chart below. That will likely result in further gains to encounter the first resistance at $439. A stronger upside momentum will break above that level and set up the next price target at $451.

Conversely, moving below $428 will put sellers in control. If that happens, TSLA will likely find the first support at $420. However, a stronger downward momentum could break below that level and invalidate the upside thesis. Also, the stock could decline further and test the second support at $412.