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Tesla’s (TSLA) stock could be in the jump-start zone.
The stock — which has plunged 41% this year — is currently in an “extremely oversold condition” on the charts, Evercore ISI technical strategist Rich Ross told me on Yahoo Finance’s Opening Bid podcast (video above; listen below).
Ross has been studying market technicals for more than 30 years. In 2024, Institutional Investor ranked Ross No. 1 in his field for the seventh straight year. He was named to Institutional Investor’s All-America Research team for the 10th year in a row.
In studying Tesla’s stock chart, Ross points to several factors in determining a potential oversold bounce in Tesla in the near term.
First, its current relative strength index (RSI) is at 32.
The RSI measures the speed and magnitude of a stock’s recent price changes in a bid to estimate overbought or oversold conditions.
When Tesla’s stock hit a record high in early December after President Trump’s reelection, shares boasted an RSI of 72. The gap between Tesla’s current RSI and the level hit at the highs suggests that a lot of bad news on demand has been priced into the stock — and how little in the way of positive news is being factored in.
Meantime, Tesla’s stock is trading below its key 50-, 100-, and 200-day moving average — a major sign of lost momentum among traders — and at a noteworthy haircut to its record market cap of more than $1 trillion.
Tesla’s market cap at the moment is $804 billion.
Ross explained, “When you take a trillion-dollar company and you give it a 32 RSI and you take 55% out of the market cap, that’s extremely oversold condition. I would just say the risk-reward is compelling when you have that technical backdrop in terms of price and momentum at extreme levels.”
Despite the charts signaling a bounce in Tesla, the bulls will have to overcome a firm bear narrative at the hands of weak fundamentals.
Tesla sold just 26,677 vehicles in China’s market in February, according to data released by the China Passenger Car Association. The figure marked an 11.16% drop year over year and a 20% decline from January.
At the same time, Australia’s Electric Vehicle Council reported that Tesla’s overall sales fell 72% year over year in February.
In the US, prices on used Cybertrucks, Model 3s, Model Ss, Model Ys, and Model Xs continue to drop. Tesla is facing increased EV competition from General Motors (GM) and Ford (F), while some consumers are opting for hybrids.
New tariffs from the Trump administration stand to raise costs for Tesla and other automakers.
The president has signed two executive orders imposing additional 25% tariffs on steel and aluminum, both key raw materials for autos.
Trump’s new trade war with China doesn’t help either — a 2023 study by Nikkei found that 40% of the suppliers for materials used in Tesla’s batteries are Chinese companies.
“While the long-term story at Tesla has shifted to AI (robo-taxis and humanoid robots) and progress there continues, we believe these are longer dated opportunities that the premium multiple already (more than) considers. Stock is currently trading at 90x P/E on consensus (EPS) estimates for 2025, but again we believe that is too high,” UBS analyst Joseph Spak wrote.
Spak recently reiterated a Sell rating on Tesla with a $225 price target.
Tesla’s stock tanked another 5% on Monday to $237. It’s the worst-performing member of the closely watched Magnificent 7 complex.
Three times each week, I field insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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