Tesla Stock Rebounds Amidst Bearish Sentiments

Tesla (TSLA) shares have regained momentum after breaching the 100-day moving average, indicating improved market sentiment. The stock has climbed nearly 6% since Thursday's surge and is trading 1.5% higher in pre-market.

Despite the recovery, Tesla's stock has endured a challenging month, with a year-to-date decline of over 30% at one point. The drop aligns with concerns over declining sales and increased competition.

China Sales Plummet

Tesla's sales in China, its largest market outside the US, have witnessed a significant reduction. The China Passenger Car Association reports a 33% drop in January vehicle deliveries compared to December.

EV Competition and Hybrid Preference

Increased EV competition and consumer preference for hybrids have contributed to the decline in Tesla's used vehicle prices. According to CarGurus, the average Tesla price has fallen by 1% in the past 30 days and 5.49% in the past 90 days.

Trump Tariffs and Chinese Suppliers

Tesla faces potential cost increases due to Trump administration tariffs on steel and aluminum, key raw materials for the company. Additionally, a study by Nikkei reveals that 40% of Tesla's battery suppliers are Chinese companies, potentially impacted by trade tensions between the US and China.

Mixed Analyst Coverage

While Wedbush analyst Dan Ives remains bullish on Tesla, Oppenheimer analyst Colin Rusch expresses caution about its prospects amid increased competition. Benchmark recently initiated coverage with a Buy rating and a $475 price target, citing the growth potential of Tesla's robotaxi and Optimus robotics initiatives.

Fourth-Quarter Performance

Tesla's fourth-quarter earnings fell short of analyst expectations, with automotive sales declining by 8% year-over-year. The company also implemented price cuts across its vehicle lineup.

Autonomous Driving and Future Prospects

Musk unveiled plans for "full self-driving as a paid service" in Austin, Texas, in June. Analysts believe autonomous driving is a significant growth opportunity for Tesla.