Is Tesla Setting Up for a Year-End Rebound-or a Collapse?

Shares of Tesla Inc. (NASDAQ: TSLA) closed just over $400 on Tuesday, continuing to bounce off the rising trendline that has supported the stock since April. To the bulls, that’s a sign of resilience and an encouraging setup heading into year-end. To the bears, the fact that support is even being tested shows how fragile sentiment has become.

It’s no surprise that Tesla remains one of the most divisive stocks on the market, and for those of us on the sidelines, it’s not made any easier with both sides having credible arguments. On the one hand, it’s holding onto most of its hard-won gains from over the summer; on the other, it’s started to give up September’s pop, having failed to hit a fresh all-time high.

With Thanksgiving week approaching and liquidity about to dry up, the next few sessions could significantly impact how Tesla trades into 2026.

Bulls See Strength Beneath the Surface

The bulls focus on the technical outlook first. The long-term trendline remains intact, indicating that the uptrend is still alive. Every time the stock has approached this level since April, buyers have stepped in.

It’s a defensive pattern that suggests underlying conviction, especially after months of sideways trading.

Beyond the chart, the fundamental story is still compelling for long-term holders. The company’s revenue is at an all-time high, it’s showing signs of getting its groove back, and it's making good progress with its Full Self-Driving technology and robotaxi initiatives. 

This week’s analyst updates reflect that optimism. The teams at both Cowen and Stifel Nicolaus reiterated their Buy ratings, with the latter boosting its price target up to $508, suggesting there’s more than 25% upside from current levels. 

Bears Say the Cracks Are Starting to Show

The bears, however, see a different picture forming. The very fact that Tesla’s support line needed testing at all underscores for them just how much momentum has faded since a promising surge in September. For them, it’s not about holding the line; it’s about why the line was reached in the first place.

After all, this was a stock trading just a few dollars below its all-time high a few weeks ago, but it has since shed 20%. 

Valuation remains their key weapon, and it’s hard not to wince at Tesla’s price-to-earnings ratio of 270.

On this point, the HSBC team reiterated its Reduce rating this week, highlighting a significant disparity between Tesla’s share price and its earnings performance. With the stock trading around $400, its valuation multiples are still far above industry averages, and analysts argue that profits simply don’t justify the price tag.

They also point to a concerning trend in earnings expectations. While Tesla’s stock has nearly doubled in the past two years, forward earnings estimates have been cut by more than half in that time, the opposite of what’s been happening at other tech giants, whose earnings outlooks have surged.

To the bears, that divergence shows how much of Tesla’s current valuation depends on hope rather than results.

Even in areas of progress, the pessimists see reasons for caution. Tesla’s future-facing projects, such as robotaxis, AI initiatives, and robotic humanoids, may sound transformative, but until they generate meaningful commercial revenue, they remain speculative.

What to Watch Heading Into Thanksgiving

Heading into Thanksgiving week, the $390–$410 zone is now the critical battleground. A continued bounce from here would likely mean the uptrend is intact going into December and that it is in a prime position for an end-of-year rally. To the downside, however, a decisive break below it would set up a move towards the low $300s. 

Investors also need to monitor how the broader market performs in the coming sessions, as concerns about tech valuations are growing in general, driven by the AI boom. Any shift toward risk-off trading and renewed volatility across mega-cap tech would likely weigh on Tesla, and there’s a chance, with the stock down nearly 20% this month, that we’re already seeing this start to play out.

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The article "Is Tesla Setting Up for a Year-End Rebound—or a Collapse?" first appeared on MarketBeat.