Tesla Bulls Need to Tread Very Carefully Right Now

Key Points

• Tesla’s uptrend since April is intact, but resistance around $350–$360 is proving a tricky level to break through. 
• Weak sales figures are still a factor, which, along with strong competition, is weighing on sentiment.
• In addition, there are signs that analysts are starting to cool, making this a delicate time to be a Tesla bull. 

Shares of Tesla Inc NASDAQ: TSLA slipped 3.5% on Friday heading into the Labor Day weekend, leaving bulls on the back foot. The drop capped a tough second half of the week for the stock and once again raised questions about whether its rally, which has been going on since April, can be sustained.

On the one hand, the uptrend remains technically intact. Tesla broke out to the upside of the tightening pennant pattern we flagged last month, a move that carried it to new short-term highs. But on the other hand, the stock continues to run into a brick wall of resistance between $350 and $360.

It's been rejected from this level several times now; in May, June, and now August, too. 

Repeated failures to break through are not the kind of weakness investors want to see from a stock that still trades 30% below last year’s all-time high while commanding a lofty price-to-earnings multiple of 193. So just how bad could it get? Let’s take a look. 

Competition and Brand Challenges Pressure Tesla Demand

The chart's lack of follow-through has been mirrored by disappointing updates on the fundamentals side. Tesla’s registrations in Sweden plunged 84% year on year in August, while sales across Europe were down about 40% in July. Early sales results from India, where Tesla launched over the summer, have also been underwhelming.

The company is facing stiff competition, lingering brand challenges linked to CEO Elon Musk, and a lack of meaningful model updates. Management has promised that “volume production” of a more affordable EV will begin by the end of the year, and while that could revive demand, it leaves a long gap that makes the company vulnerable to losing market share.

In the meantime, rivals among the traditional automakers are pressing harder into electric vehicles, eroding Tesla’s once-untouchable dominance.

Tesla Faces Both Competitive and Cyclical Pressures

Beyond near-term sales numbers, investors are also weighing the broader demand backdrop for electric vehicles (EVs). Industry-wide data has shown growth in EV adoption slowing in some key markets, with consumer affordability a key challenge.

This leaves Tesla fighting not just against aggressive competition but also against cyclical demand headwinds. The company’s reliance on a narrow product line amplifies this risk, as it lacks the diversity that helps peers absorb weakness in one segment with strength in another.

Analyst Conviction Cooling on Tesla Stock

That being said, for much of this year, Tesla has benefited from resilient support on Wall Street. But even here, cracks are now starting to show.

The Goldman Sachs team reiterated its Neutral rating toward the end of August, warning that Tesla may be more adversely affected than peers by the looming expiration of U.S. federal EV tax credits later this month.

They also flagged rising competition as a headwind that could limit the stock's upside in the near term.

This is not the kind of analyst momentum that fuels sustainable rallies. Tesla has always been a polarizing stock, but the distinct lack of fresh positive updates from major firms in recent weeks has left bulls without much ammunition.

Critical Levels to Watch

Technically, Tesla is now in a precarious position. As mentioned above, the stock has been turned back again from $360, and if the selling pressure continues into this week, it could soon be testing $320. A break below there would signal that the April uptrend is at risk of breaking down, opening the door to a deeper pullback.

On the flip side, if Tesla can consolidate around current levels and mount another run at $350–$360, a decisive breakout above that range would go a long way toward resetting the bullish narrative. But given the string of failed attempts, investors will want to see a clean, high-volume move through resistance before assuming that the path higher is clear.