Top Reasons Why Tesla Stock Will Rebound Despite Falling Deliveries

Key Insights

• Tesla stock price has crashed from $503 in December to $363 today.
• The company reported weak vehicle delivery numbers earlier this month.
• It has some highly bullish catalysts, including the falling wedge.

Tesla’s stock price has been in a free fall this year, falling from an all-time high of $506 to $364 today. This retreat continued recently after the company published a weak delivery report that misseanalysts’s’ estimates. Still, the company has some bullish catalysts that may trigger a rebound despite its steep valuation.

Tesla Stock Price Chart Shows a Falling Wedge Pattern Has Formed

Technical analysis suggests a strong rebound in TSLA stock prices in the near term. The most notable catalyst is that it has been forming a falling wedge chart pattern, which normally leads to a strong rebound.

This pattern consists of two descending, converging trendlines. In this case, the upper connects the highest swings in December last year and February, March, and April.

The lower one links its lowest swings in each month of this year. In most cases, a strong rebound normally happens when the two lines are nearing their confluence, which is happening today.

This convergence is occurring at an important support level that coincides with the 50% Fibonacci Retracement. This Fibonacci is drawn by connecting the lowest and highest levels in April and December last year.

In most cases, rebounds normally happen when an asset moves to the 50% or 61.8% Fibonacci Retracement level.

The two lines of the Percentage Price Oscillator (PPO) have formed a bullish crossover, while the Relative Strength Index (RSI) has jumped to 45.

Therefore, the stock will likely stage a strong comeback and move to the key resistance level at $500. On the flip side, a drop below the 61.8% retracement level at $325 will invalidate the bullish outlook.

Tesla May Benefit From the Soaring Gas Prices

One unintended consequence of the ongoing Iran war is the soaring gas and diesel prices in the US and other countries. AAA data shows that the average gasoline price has jumped to $4 a gallon, up by over $1 since the war started.

The surge in gasoline prices means many consumers will opt to buy electric vehicles, either brand-new or used. Such a move will benefit Tesla, which has the largest market share in the US industry.

Tesla is also benefiting from the recent decisions by large automakers like Ford and General Motors to write down their EV businesses to focus on their traditional models, which are doing well. Tesla’s main challenges are that its vehicles are still considered expensive and that it lacks a competitive truck. This issue has become more pronounced now that the Trump administration ended the $7,500 EV tax credit.

Tesla’s main challenges are that its vehicles are still considered expensive and that it lacks a competitive truck. This issue has become more pronounced now that the Trump administration ended the $7,500 EV tax credit.

Still, Tesla is working to solve this by launching a smaller, cheaper car that would be more affordable than the Model 3.

Another potential catalyst that Tesla has not announced is the launch of a conventional pickup truck to replace the failing Cybertruck.

This potential growth may help supercharge its growth, which has stalled over the past few months. For example, the most recent numbers showed that Tesla’s deliveries fell to 341,893, while its production rose to 408,386.

SpaceX IPO to Boost Tesla Shares

Meanwhile, Elon Musk’s SpaceX is working on the biggest IPO ever, raising over $35 billion at a valuation of over $1.75 trillion. This IPO is expected to benefit Tesla because of its small stake in the company.

Tesla gained this exposure by investing in xAI, which merged with SpaceX earlier this year. That small investment of about $2 billion may turn out to be a major one once the company starts trading. The IPO is expected to happen in June this year.

Meanwhile, Wall Street analysts are predicting that it will return to growth in the coming quarters and years. The average estimate among analysts is that its annual revenue will jump by 8.2% this year, followed by 17% YoY to $120 billion next year.

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