- Tesla stock declined sharply, starting in the last week of December and overflowing to the first week of January
- The company reported declined annual sales last year, but its energy business segment is outperforming
- Confident pronouncements by CEO Elon Musk have boosted investor sentiment
Tesla stock (NASDAQ: TSLA) has shown signs of life in recent days, climbing 3% over the last five trading sessions amid broader market fluctuations. As of close of trade on Monday, shares hover around $448, marking a tentative recovery from the lows experienced late last year. Tesla stock price previously declined substantially dropping from $498 on December 21, 2025 and extending to $431 January 7, 2026.
Why Tesla Stock is Rebounding
The main reason for the upswing seems to be that investors are upbeat about Tesla’s energy business and what they’re doing in the long run. Even though they didn’t hit their delivery forecasts for 2025 (sales dropped 8.5% to 1.63 million cars), their energy stuff is doing well.
Economic Times highlights how growth in energy storage and deployments encouraged buyers, pushing shares higher to start the year. Additionally, Elon Musk’s recent share purchases and public statements on self-driving advancements have bolstered sentiment. Forbes notes Musk’s announcement that Tesla requires 10 billion miles of data for safe unsupervised autonomy, framing it as a challenging yet achievable goal that could redefine the company’s value.
Is the Downturn Truly Over?
It looks like Tesla might be turning things around, but it’s not a sure thing. That 3% gain is nice, but the stock is still in a tricky situation. Some analysts, like Dan Ives from Wedbush, are very optimistic and think Tesla could be worth $2 trillion by the end of the year.
Others, like Wells Fargo, are more careful. They raised their price target but still don’t recommend buying and have an “underweight” rating on the stock because of the shrinking profits and tough competition in Europe and China. If Tesla is to keep this recovery for long, it needs to prove it can keep its car profit margins around 17%-20% even with global price wars.
Tesla Stock Faces Risks in 2026
The biggest hurdle remains the “valuation gap.” At a price-to-earnings ratio often exceeding 300x, Tesla’s stock is essentially a massive bet on a future that hasn’t arrived yet. Specifically, these include autonomous taxis and humanoid robots.
Tesla Stock Price Prediction
Tesla is currently testing a pivotal resistance zone between the 20-day SMA at $461.93 and $475. If it can break through this, it could quickly jump to $490, potentially driven by dealers. The Relative Strength Index (RSI) is neutral at 49 and rising, indicating that the buyers are in control. On the downside, there’s solid support at $435.60, with an even stronger safety net at $424.80, corresponding to the 100-day SMA.
Tesla stock on the daily chart with support and resistance levels for January 13, 2026. Created on TradingView
The rise is mainly driven by optimism in energy growth and self-driving progress, despite delivery misses, as well as confident pronouncements on self-driving milestones by CEO Elon Musk.
For traders, the $424 level is key. If the stock drops below that, it could mean more trouble. On the flip side, if it can break above $461, the recovery might have legs and could test higher resistance levels.
The recovery could end if self-driving tech faces regulatory issues, if Q1 deliveries are disappointing, or if margins shrink. The stock could fall if the AI and Robotics story doesn’t translate into actual profits.