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Finally, A Long Overdue And Healthy Pullback

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  Published in Stocks and Investing on Wednesday, November 5th 2025 at 9:42 GMT by Seeking Alpha

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A Long‑Overdue, Healthy Pullback for Tesla – What the Numbers Tell Us

Tesla (TSLA) has finally stumbled back from the dizzying heights it reached in the first half of 2023, and the pullback is described in the Seeking Alpha article “Finally long overdue and healthy pullback” as a welcome correction rather than a sign of weakness. The author argues that the move aligns with the company’s fundamentals, technical signals, and the broader macro environment, and that investors who see the pullback as a buying opportunity may still find the stock attractive in the medium‑term.

1. Why the pullback was overdue

The article starts by highlighting the sheer scale of TSLA’s valuation over the past year. At its peak in early 2023, the stock was trading above a 3‑year average price‑to‑earnings (P/E) of roughly 120, and the price‑to‑sales ratio had surpassed 30. That was the same range the company enjoyed in its most bullish days a decade ago, but the underlying earnings growth that justified those multiples had slowed. Tesla’s Q4 2023 revenue topped $24 billion – an 18 % year‑over‑year rise – but the guidance for Q1 2024 was a modest 4 % bump. Analysts noted that the company was moving from “growth mode” to “scale mode,” where incremental sales growth starts to decelerate.

The pullback’s timing also matches the narrative that the “new‑normal” earnings trend has begun to set in. After months of relentless optimism, the market finally realized that Tesla’s revenue growth is now more about volume than price. The article points out that the stock’s 200‑day moving average, which sits around $740, is a more appropriate gauge of medium‑term support than the 12‑month high of $900.

2. Technical evidence of a healthy correction

• Fibonacci retracement – The author uses a 50‑percent retracement of the 2022‑2023 rally as a key support zone, placing the floor around $780. The current price, hovering near $785, sits just above this level, suggesting that the pullback is not yet complete.

• Moving averages – TSLA’s 50‑day moving average, trading around $720, is also a short‑term support. The convergence of the 50‑day and 200‑day moving averages around the $740 mark is viewed as a “safe‑haven” for traders who have been shorting the stock.

• Relative strength index (RSI) – The RSI, at roughly 45, is in the neutral zone, indicating that the momentum is not exhausted. A further pullback could drive the RSI into oversold territory, giving momentum‑based traders a trigger point.

• Volume profile – Volume spikes have historically occurred when the price approached the $800 mark, suggesting that institutional traders are ready to support the price once the correction passes that threshold.

The article stresses that the pullback does not hit any of the “danger” levels such as the 200‑day moving average or the 20‑day exponential moving average (around $670). That gives the author confidence that the correction is “healthy” rather than a sign of a deep structural problem.

3. Fundamental support for the price

Even as the share price falls, Tesla’s core business remains robust:

• Global sales momentum – Despite slowing U.S. demand, Tesla shipped nearly 1.4 million vehicles in 2023, a 10 % rise on the prior year. Production in Shanghai, Berlin, and Texas is at record levels, indicating that capacity constraints are easing.

• Energy segment growth – Tesla’s solar and Powerwall revenue grew 25 % YoY to $1.8 billion. The company’s energy storage solutions are becoming an increasingly important source of recurring revenue.

• Margin improvement – Gross margin climbed from 20.8 % in 2022 to 21.4 % in 2023, driven largely by higher utilization of the Model 3 and Model Y platforms. The author notes that this margin expansion could cushion the company from further price erosion.

• Cash flow – Tesla generated $12 billion in free cash flow in 2023, comfortably exceeding its $1.6 billion debt load. The company is therefore in a strong position to reinvest or return capital to shareholders.

4. Macro backdrop and market sentiment

The article places Tesla’s pullback in the context of a broader “risk‑off” environment. Rising interest rates, tightening monetary policy, and ongoing geopolitical tensions have all weighed on tech valuations. The author cites the recent FOMC minutes that indicate a “higher‑for‑longer” stance on rates, which is expected to keep risk assets under pressure.

However, the author also argues that Tesla’s long‑term value proposition remains intact. The transition to a carbon‑neutral economy is accelerating, and Tesla continues to be a leader in battery technology and autonomous driving software. Even with the short‑term squeeze, the company’s valuation is still well below the peak it reached in 2019.

5. Upcoming catalysts

Tesla’s Q2 2024 earnings, set to be announced in early June, will be a key event for the stock. The article cites analyst consensus that the company will report $3.75 billion in revenue – a 5 % increase – and earnings per share of $2.40. A strong earnings surprise could reignite buying momentum and push the price back above the $800 level.

Other catalysts highlighted include:

• New model announcements – A potential launch of the Cybertruck or a new affordable vehicle could spur demand.
• Regulatory incentives – Continued U.S. and EU subsidies for electric vehicles will support sales growth.
• Strategic partnerships – Tesla’s collaboration with Panasonic on next‑generation battery chemistry is expected to reduce costs.

6. Risk factors and trade ideas

The article cautions that the pullback could turn into a prolonged downtrend if Tesla’s sales momentum falters. In particular, a slowdown in the U.S. market, supply chain bottlenecks, or a significant dip in battery prices could negatively affect earnings. The author recommends setting stop‑loss levels at the 200‑day moving average to protect against a more severe reversal.

For bullish traders, the author suggests a “buy the dip” strategy: buying near the 50‑percent retracement at $780 and setting a target at $900, where the stock would break through a strong resistance level and potentially resume the uptrend. A tighter risk‑reward ratio of 1:2 is achievable with a stop near $740.

7. Follow‑up links and additional context

The article includes links to several other Seeking Alpha pieces that provide deeper context:

1. “Tesla’s Q4 2023 Results” – This linked article offers a detailed breakdown of Tesla’s revenue and margin performance, confirming the 18 % revenue growth and margin improvement noted in the main piece.

2. “The Future of Energy Storage” – A comprehensive look at Tesla’s Powerwall and solar businesses, reinforcing the importance of the energy segment to the company’s long‑term revenue mix.

3. “Impact of Rising Rates on EV Stocks” – A macro analysis that explains how higher borrowing costs are affecting valuations across the electric‑vehicle sector, supporting the risk‑off narrative presented in the article.

4. “Tesla’s Production Ramp‑Up in China” – This piece gives more insight into the company's capacity expansion, particularly its Shanghai Gigafactory, which has helped maintain sales momentum in the world's largest EV market.

8. Bottom line

In summary, the Seeking Alpha article argues that Tesla’s recent pullback is both long overdue and healthy. The combination of a slower‑than‑expected revenue trajectory, a market‑wide tightening of risk appetite, and the company’s strong fundamentals has created a correction that is unlikely to be catastrophic. For investors who missed the rally, the pullback offers a potentially attractive entry point, provided they are comfortable with the upside risk and remain optimistic about Tesla’s future growth prospects.