Tesla Shares Face a Critical Test as Rally Momentum Fades

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Tesla shares concluded 2025 on a strong upward trend, but a failed attempt to breach a key price level just before year-end has shifted investor focus squarely onto the company's fundamentals. The stock, now trading around $475, faces mounting questions about whether its core automotive operations can justify its lofty valuation, moving past the recent legal resolution concerning CEO Elon Musk's compensation.

The recent rally met a formidable barrier at the psychologically significant $500 mark. After hitting a 52-week high of $498.83 on December 22, the equity retreated under substantial profit-taking pressure. Trading closed on Friday, December 26, with a 2.1% decline to $475.19, near the session's lowest levels.

From a technical perspective, the $500 level has solidified as a clear zone of supply. Market participants are now closely monitoring support near $470. A decisive break below this level could trigger a deeper correction toward the 50-day moving average. Conversely, a convincing rebound from current levels is necessary to reignite the year-end rally's momentum.

Diverging Signals: Deutsche Bank Adjusts View

One of the most notable developments last week came from analyst research. Deutsche Bank significantly reduced its delivery forecast for the fourth quarter of 2025 to 405,000 vehicles, representing a 14% year-over-year decline. The bank cited weak market conditions in both Europe and North America. This figure contrasts with the broader analyst consensus, which remains near 450,000 units.

Despite this downward revision for deliveries, Deutsche Bank simultaneously raised its price target for Tesla to $500. The rationale centers on progress in the robotaxi and humanoid robot segments, which the analysts believe merit higher valuation multiples. This reflects a growing view of Tesla as an artificial intelligence and technology company rather than a pure-play automaker. This valuation logic helps explain why the stock continues to trade at a price-to-earnings ratio exceeding 300, even amid operational headwinds.

The Core Challenge: Bridging the Valuation Gap

This dichotomy presents the central challenge for investors. Tesla commands a substantial premium based on its long-term visions for autonomous driving, robotaxis, and the Optimus robot. Simultaneously, its foundational electric vehicle business is showing signs of strain. Upcoming delivery figures will likely quantify the actual size of this gap.

The legal confirmation of Elon Musk's compensation package on December 19 provided a temporary boost, lifting the share price by approximately 2%. With that overhang removed, the market's attention has returned entirely to operational performance.

The immediate technical test at the $470 support level is critical. If it holds, the path remains open for another attempt at the $500 threshold in early 2026. However, should the official delivery numbers confirm the more pessimistic estimates, a downward re-rating of the stock becomes a tangible risk.