Shares of Tesla Inc. (NASDAQ: TSLA) have staged a remarkable rally over the past two weeks, climbing more than 30% after losing over half their value since December. At $288 as of Tuesday night, the stock has begun to claw back ground that many feared was permanently lost.
The sell-off, driven by a mix of political controversy, shifting consumer sentiment, and missed earnings, pushed shares to 2020 levels by mid-March. CEO Elon Musk’s increasingly polarizing public persona, particularly his close alignment with President Trump, alienated a significant portion of Tesla’s former customer base. Meanwhile, rising trade-ins at Tesla dealerships and weaker-than-expected demand painted a bleak near-term outlook for the brand.
However, markets have a way of overreacting in both directions. Just as Tesla’s previous decline appeared to overshoot to the downside, the recent surge is raising eyebrows. The question now is whether this is the beginning of a sustainable turnaround or merely a dead-cat bounce driven by technicals and sentiment.
The Fundamental Case Remains Shaky
[content-module:Forecast|NASDAQ: TSLA]Tesla’s most recent earnings report, released at the end of January, was disappointing. Revenue and earnings both missed expectations, and commentary around future demand failed to inspire confidence.
Consumer interest has been weighed down by macroeconomic concerns and the brand’s increasingly politicized perception. Reports surfaced in recent weeks showing a record number of trade-ins, a trend that has analysts questioning whether Tesla’s brand has peaked and attacks on Tesla cars and dealerships. While Musk has hinted at upcoming product launches and price cuts, skeptics argue these may not be enough to reverse the sentiment or market share decline.
Expectations for next month’s earnings report are low, but that could work in Tesla’s favor. The company has a track record of occasionally surprising investors with upside results when the bar has been set low, and right now, it couldn’t be much lower. If that pattern holds and Tesla delivers a better-than-expected quarter, the recent recovery could gain further traction.
Analysts Are Turning Bullish Again
Despite the uncertainty, analysts have wasted no time reiterating their long-term bullish views. In the past few days alone, the teams at Morgan Stanley, Wedbush and Piper Sandler, to name just a few, have all reiterated their Buy or equivalent ratings.
Price targets vary, but they’re all significantly above current levels. Wedbush stands out with its target of $550, suggesting an upside of over 90% from Tuesday’s closing price. Even the lower end of these targets, Morgan Stanley’s $410, implies more than 40% potential returns.
What’s behind the renewed optimism? Analysts are betting that Tesla’s long-term innovation engine will eventually override near-term concerns, particularly in autonomous driving, energy storage, and mass-market EVs. The expected release of a sub-$35,000 model later this year and broader cost-cutting initiatives could help reinvigorate demand across demographic lines.
Wedbush, in particular, believes Tesla is at the start of what it calls a “multi-year AI-driven vehicle transformation.” The firm argues that Tesla's current share price does not reflect its potential to lead this next wave of automotive innovation.
Technicals Support the Reversal
[content-module:TradingView|NASDAQ: TSLA]From a technical standpoint, Tesla appears to have found a floor. The stock’s relative strength index (RSI) hit a deeply oversold 21 earlier this month and has since rebounded to 52. This shift suggests that the worst of the selling may be behind it.
The moving average convergence divergence (MACD) indicator recently completed a bullish crossover, signaling a potential trend reversal. While technical indicators should never be relied on in isolation, this alignment, rising RSI and MACD momentum, often precedes short-term upward moves.
Additionally, the broader market has stabilized. The S&P 500’s recent bounce has helped support risk-on sentiment, from which Tesla tends to benefit disproportionately. If that trend continues, Tesla could remain one of the more volatile but also more rewarding ways to play the rebound.
Considering Getting Involved
Tesla’s 50% drawdown was brutal, but the recent rally is forcing investors to reconsider. While the fundamental challenges—brand damage, political overhang, and competitive pressure—remain real, they may already be largely priced in.
With analysts reaffirming bullish positions, technicals improving, and the broader market no longer falling, a legitimate argument exists that Tesla’s comeback is underway. The upcoming earnings report will be crucial, but even a modest beat could provide the fuel needed to drive the next leg higher if expectations are low enough.
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