Tesla stock selloff takes stage amid rebound following Terafab announcement

On March 16, 2026, Tesla shares (TSLA) closed the trading day at $395, showing a modest recovery after last week’s decline. Elon Musk’s announcement that the Terafab project—the company’s own AI chip initiative—will launch within the next seven days, was the primary driver behind the latest rebound. However, any subsequent wave of interest from buyers is likely to be short-lived and insufficient to reverse the broader downtrend.

Moreover, Terafab carries significant financial risks. Upfront investments could reach $30 billion, while the full implementation of the project might require as much as $300 billion. The firm has already reported capital expenditures exceeding $20 billion since the start of 2026. For the first time in eight years, Tesla is at risk of posting negative free cash flow.

In the meantime, Musk’s auto business continues to lose steam. Both Morgan Stanley and Morningstar forecast a third consecutive drop in deliveries this year. Attempts to stimulate demand by cutting prices have not yielded the expected results, as these reductions have failed to fully offset the elimination of tax incentives for electric vehicles in the United States. Another headache for Tesla is intensifying competition from strong rivals, such as BYD and Xiaomi, who are now heating up the market.

Technical and fundamental puzzle pieces fit together neatly. Momentum indicators show that the steady downtrend remains firmly in place. However, this week, prices are poised to test the $400 resistance. The Chaikin Oscillator is still in the red and continues to slide, signaling significant capital outflows and mounting selling pressure. No divergence between the price and the indicator confirms the ongoing decline.

Given the positive news surrounding the Terafab launch, Tesla stock could move sideways within the $381–$416 range in the short term. This very dynamic gives us a chance to open favorable selling positions.

Take a look at the trading plan down below:

Sell TSLA during the rebound near $400. Place Take profit at $385 and Stop loss at $411.

This forecast remains relevant between March 17 and March 24, 2026.