Selling Tesla stock ahead of quarterly earnings release

Tesla shares closed Monday’s trading session with a rise to $447.58. Modest upward momentum is now pushing the price toward resistance. Key drivers of the recent gains have been reduced US-China trade tensions and positive earnings reports, which have temporarily taken the spotlight off Tesla’s underlying challenges.

The tech firm’s fundamental setup remains tricky. Supply growth of 7% to 497,099 vehicles in the third quarter (Q3) was partially driven by excessive demand ahead of expiring tax credits in late September. This creates a tangible risk of a slowdown in Q4, despite the launch of cheaper Model 3 and Model Y versions. Furthermore, margin pressure persists due to an evolving product mix and high capital expenditures.

Another factor contributing to overall uncertainty is the proposed compensation package for Elon Musk. ISS and Glass Lewis advisors' recommendations to vote against it add uncertainty to corporate governance, taking attention away from operational tasks. However, the package will probably be approved anyway. These discussions might only cause short-term volatility.

The technical picture shows signs of cautious optimism, with the RSI in neutral territory at 49 and the Chaikin Oscillator signaling another wave of buying interest. Nevertheless, this momentum appears insufficient for a decisive break above the key resistance level, especially ahead of quarterly earnings reports that may reveal weaker profitability. Even if the Q3 results turn out to be positive, investors may use the opportunity to take profits, given the company's deteriorating prospects following the cancellation of electric vehicle incentives.

Consider the following trading strategy:

Sell Tesla shares at the current price ahead of the Q3 earnings release. Set Take Profit at $400 and place Stop Loss at $469.

This forecast remains valid from October 21 to October 28, 2025.