Tesla Inc. TSLA is experiencing significant difficulties in 2024, with shares down 31.67% year to date and 8.95% in the last month. The technical analysis reveals a challenging environment, as Tesla’s stock trades below its five, 20, and 50-day exponential moving averages, signaling a pronounced bearish trend.

Despite this downturn, signs of buying pressure could indicate a potential for future bullish movement.

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Technical Indicators Signal Continued Challenges for Tesla

As of now, Tesla’s stock price stands at $263.46, which is lower than its eight-day simple moving average of $268.33—a bearish indication. The stock is also trading beneath the 50-day simple moving average of $316.12 and the 200-day simple moving average of $287.52, confirming the broader downward trend.

The Moving Average Convergence Divergence (MACD) indicator, currently at negative 12.09, also suggests ongoing bearish sentiment. Furthermore, the Relative Strength Index (RSI) sits at 45.53, indicating that while Tesla’s stock is approaching oversold territory, it has yet to enter the rebound zone.

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Declining European Sales and a Hits from Wells Fargo

Recent reports show Tesla’s sales are slipping in critical European markets. Registrations in France, Sweden, Denmark, and the Netherlands have decreased for a third consecutive month. Specifically, Denmark faced a sharp 65.6% year-over-year drop in March, with first-quarter data for France and Sweden hitting their lowest marks since 2021. These figures indicate Tesla is struggling to compete against rising Chinese competition and consumer backlash related to CEO Elon Musk‘s political views.

Amid these challenges, Wells Fargo has expressed skepticism regarding any immediate recovery for Tesla. The bank has placed Tesla on its Tactical Underweight list, categorizing it as a conviction short for the second quarter. Analysts highlighted concerns surrounding declining delivery growth, pricing challenges, and execution risks related to Tesla’s autonomous vehicle initiatives. Consequently, Wells Fargo reduced its price target to $130, suggesting nearly a 50% downside from current levels.

Model Y Refresh: A Double-Edged Sword?

In response to the stock’s struggles, Tesla is preparing to launch an updated version of its Model Y, the company’s best-selling SUV. Although this refresh could potentially boost demand, Wells Fargo is wary, suggesting that Tesla’s capacity for volume growth is restricted unless it implements aggressive price cuts. The bank further cautions that the forthcoming “Model 2.5” may unintentionally cannibalize demand for Tesla’s current models instead of expanding its customer base significantly.

With first-quarter sales figures expected to be released this week, investors will be closely monitoring for signs of stabilization. However, Tesla’s stock remains in a precarious position, and Wall Street is hesitant to endorse a bullish outlook at this time.

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