Optimism for Tesla is limited by weak sales and competition

Tesla's stock surged late last week and early this week, reaching $320.65 per share. Investor interest in the electric car maker's securities was bolstered by Elon Musk’s renewed focus on the company following his involvement in the Trump administration, as well as easing US-China trade tensions.

Reduced trade uncertainty benefits Tesla shares, especially since its Shanghai plant serves as the company’s most important production hub. However, this positive momentum only partially offset the company's deep-seated issues in China, where April sales plummeted 26% month-over-month and dropped nearly 6% year-over-year.

Investors are cautiously optimistic about Musk's renewed focus on Tesla, expecting it to enhance operational efficiency and help overcome current hurdles. Nonetheless, weak sales performance in key markets and a lack of bright new products in the lineup continue to weigh on Tesla's long-term prospects.

The June 1 robotaxi launch could be a significant catalyst for the stock, but fundamental challenges remain. These include an aging product lineup and increasing competition from local manufacturers in China. At the same time, the uncertainty surrounding trademark registration for new services adds additional risks to the company's innovative directions.

Technically, Tesla's shares indicate an uptrend, with a golden cross forming on the daily chart between EMA (50) and EMA (20), a classic buy signal. However, the overbought RSI suggests a potential short-term correction and pullback in prices.

Current recommendation:

For short-term perspective, it is recommended to sell during correction. Take-profit could be set at 280. Set a stop loss at 330.