Selling Tesla shares on shaky corporate fundamentals

On Monday, October 6, Tesla shares posted substantial gains, buoyed by the company's reveal of an event scheduled for October 7. This generated excitement among investors, who are eagerly awaiting the unveiling of a more budget-friendly Model Y. A new crossover could potentially reinvigorate demand affected by the recent expiration of the US federal electric vehicle tax credit. 

Nevertheless, this upbeat outlook is likely to be reflected in the current stock price, given the company's shaky fundamentals. The credit expiration in early October pulled forward demand, creating an artificially inflated sales surge in the third quarter (Q3) to be followed by a significant slowdown in the fourth one (Q4). 

Simultaneously, Tesla's key European market continues to display weakness, with sales in Germany falling 9.4% in September amid a broader regional decline driven by intensifying competition and an aging lineup. 

Although launching a lower-priced Model Y is key to stimulating demand, it poses risks to the company's already pressured profit margins. To hit the 20% cost reduction target, some features need to be eliminated, which could make the product less appealing. These challenges are made even worse by ongoing reputational risks stemming from lawsuits related to the safety of the Cybertruck.

Successful unveiling of the budget-friendly Model Y, with its attractive price and compelling specifications, would give the stock additional bullish momentum. Conversely, if the announcement lacks specifics or fails to show evidence of demand recovery in Europe, shares are likely to correct toward the $429.00 support, with a break below this level opening a path toward $400.00. 

Technically, the market has been in an uptrend since September 2. This trend was briefly interrupted by a correction after reaching a local high of $469.25, but it resumed on October 6. The Chaikin Oscillator has turned positive and is rising after finding a local low in early October. This signals that investors are prepared to buy more after the short-term pullback, which supports the renewed bullish momentum.

Consider the trading plan down below:

Given the optimism surrounding the new model launch, sell Tesla shares at the current price. Take profit: $400.00. Stop loss: $488.00.

This forecast is valid from October 7 to October 14, 2025.