Tesla stock drops to $275 as Europe sales slump 32%
Another factor weighing on Tesla is its high valuation
As of May 7, Tesla stock is trading at $275.35, reflecting a 1.75% decline in the last 24 hours. The stock opened at $273.07, reached an intraday high of $279.77, and dipped to a low of $271.94.
The trading volume stands at approximately 76.7 million shares, reflecting active investor participation. Despite the recent decline, Tesla remains one of the most closely watched stocks in the technology and automotive sectors.
Tesla Inc. (TSLA) is currently trading below its 50-day moving average of $280.00 and 200-day moving average of $290.00, indicating a short-term bearish trend. The Relative Strength Index (RSI) stands at around 45, a neutral zone but approaching oversold territory. Historically, an RSI below 30 signals oversold conditions, while above 70 indicates overbought levels. If the RSI continues to decline, it may trigger a wave of buying interest from technical traders seeking value.
TSLA stock price dynamics (March 2025 - May 2025). Source: TradingView.
Key support levels for Tesla are identified at $270.00 and $260.00, which have previously acted as strong buying zones. A sustained break below these levels could open the door for further declines. Conversely, resistance is expected at $280.00 and $290.00, with a clear break above potentially shifting the short-term trend back to bullish.
Market context: European sales slump and valuation concerns
Tesla’s recent performance has been impacted by disappointing sales data from Europe. In Germany, one of its key markets, Tesla’s sales declined by 32% year-over-year in April. This drop has been attributed to reduced government subsidies for electric vehicles and increasing competition from domestic manufacturers like Volkswagen, BMW, and Mercedes-Benz. The European market has become increasingly competitive, with local brands offering a growing range of electric vehicle (EV) options.
Another factor weighing on Tesla is its high valuation. The company’s current price-to-earnings (P/E) ratio is 171.73, significantly higher than most of its peers in the automotive sector. Such a high P/E suggests that investors are pricing in strong future growth, but this optimism could be challenged if Tesla’s growth rate slows. The forward P/E ratio, which stands at 119.05, is still elevated, reflecting high market expectations for the company’s future earnings. However, any signs of slowing growth or further sales declines could put downward pressure on the stock.
Potential short-term rebound contingent on support levels
In the short term, Tesla’s stock price is likely to remain volatile as it tests key support levels. If the stock holds above $270.00, a rebound toward the $280.00–$285.00 range is plausible, driven by technical buying and potential positive news. However, if the stock breaks below $270.00, it could trigger a sell-off, pushing the price down to the next support at $260.00.
Investors should also keep an eye on broader market trends, such as interest rate movements, macroeconomic data, and developments in the EV sector, which can influence Tesla’s performance. The company’s upcoming earnings reports will also be crucial, as they provide insights into revenue growth, profit margins, and the performance of its new models.
Tesla's performance has been impacted by market-wide volatility amid geopolitical tensions, including potential 100% tariffs on foreign EVs. High-growth stocks like Tesla also face pressure from Federal Reserve signals indicating sustained high interest rates.
