Tesla shares are poised to correct following Elon Musk’s visit to China

On Monday, May 11, Tesla stock (TSLA) jumped above $440, gaining more than 4%. Such a surge was triggered by Elon Musk’s confirmed participation in the US-China talks scheduled for May 13–15 as part of Donald Trump’s delegation. Investors are full of hopes that the meeting will speed up the approval of Tesla’s Full Self-Driving (FSD) system by Asian regulators. If this happens, new opportunities will open up for the tech giant in the world’s largest auto market.

However, the real situation in China is far from the perfect picture. In April, retail car sales fell by 10% year-over-year, while Tesla’s share of the electric vehicle (EV) segment dropped to 4% to the lowest level since November 2025. Strong rivals—BYD, Xiaomi, and Huawei—are now casting a long shadow over Musk’s brainchild by offering customers affordable models with built-in driver-assistance systems at no extra charge. In the meantime, the FSD approval has already been delayed twice, and the next opportunity is not expected until the third quarter (Q3) of 2026—a serious bump on the company’s way up.

Tesla’s financial results for Q1 look promising, with revenue of $16.2 billion (+16% compared to last year). However, the net margin was extremely low (just above 4%)—a worrisome sign for a firm with such a high valuation.

From a technical standpoint, strong bullish momentum is visible on Tesla’s chart. Breaching the upper Bollinger Band on May 8 and May 11 confirms this trend. At the same time, the Stochastic Oscillator points to rising tensions. Its %K and %D converged near the 70 level, suggesting that the rally may be losing steam. Deviation beyond the upper band also creates the risk of a pullback toward the mean at $386.33.

Consider the following trading strategy:

Sell TSLA near $440.00, with Take profit at $408.00 and Stop loss at $460.00.

This forecast remains relevant between May 12 and May 19, 2026.