Tesla Plummets 2.66% Amid Regulatory Scrutiny and Ark Sell-Off – What’s Next for the EV Giant?

Summary
• Tesla’s stock plunges 2.66% to $462.54, its lowest since late 2024.
• California judge orders Tesla to revise Autopilot marketing within 90 days.
• Cathie Wood’s Ark Invest dumps $30 million in Tesla shares.

Today’s selloff in Tesla reflects a perfect storm of regulatory headwinds and institutional skepticism. The stock’s intraday range of $461.32–$469.40 underscores volatile sentiment, with the 52-week high of $498.83 now a distant memory. As the autonomous vehicle sector braces for tighter oversight, investors are recalibrating expectations for Tesla’s robotaxi ambitions.

Regulatory Clampdown on Autopilot Sparks Investor Fears
A California administrative law judge ruled Tesla’s Autopilot and Full Self-Driving (FSD) marketing misrepresents the technology’s capabilities, forcing the company to revise its messaging within 90 days or risk losing its California sales license. The decision, which aligns with state regulators’ arguments that Tesla’s systems do not meet SAE Levels 3–5 automation standards, has amplified concerns about the legal and reputational risks of overhyping autonomous features. This regulatory blow, combined with Cathie Wood’s $30 million sell-off of Tesla shares via Ark Invest, has triggered a sharp selloff as investors reassess the stock’s growth narrative.

Autonomous Vehicle Sector Volatile as Mobileye Gains Ground
While Tesla’s shares falter, Mobileye Global (MBLY), a leader in advanced driver-assistance systems, rose 1.87% on the day. The divergence highlights growing investor caution toward Tesla’s regulatory exposure versus more established players in the autonomous vehicle space. Mobileye’s recent partnerships with automakers for Level 3 systems underscore its position as a safer bet in a sector increasingly scrutinized for overpromising.

Bearish Options Play and ETFs to Hedge Tesla’s Regulatory Risks
• 200-day average: 355.96 (well below current price)
• RSI: 57.38 (neutral, but trending lower)
• MACD: 14.19 (bullish divergence, but signal line at 12.48 suggests weakening momentum)
• Bollinger Bands: Price near lower band at $419.06, indicating oversold territory
• Kline pattern: Short-term bearish trend, long-term bullish

Tesla’s technicals suggest a fragile setup. The 200-day average remains a critical support level, while the RSI and MACD hint at potential for a rebound. However, the bearish Kline pattern and regulatory risks make a cautious approach prudent. For options traders, two contracts stand out:

• TSLA20260102C465 (Call, $465 strike, Jan 2 2026):
- IV: 38.04% (moderate)
- Leverage ratio: 62.57% (high)
- Delta: 0.475 (moderate sensitivity)
- Theta: -2.58 (significant time decay)
- Gamma: 0.0193 (high sensitivity to price swings)
- Turnover: $42M (liquid)
This call option offers high leverage and liquidity, ideal for a short-term bearish bet if Tesla breaks below $460. A 5% downside to $440 would yield a payoff of $15 per contract.

• TSLA20260102C467.5 (Call, $467.5 strike, Jan 2 2026):
- IV: 38.30% (moderate)
- Leverage ratio: 72.68% (very high)
- Delta: 0.428 (moderate sensitivity)
- Theta: -2.40 (high time decay)
- Gamma: 0.0189 (high sensitivity)
- Turnover: $25.7M (liquid)
This contract’s high leverage and gamma make it a potent play for aggressive bears. A 5% drop to $440 would generate a $17.50 payoff per contract. Both options benefit from Tesla’s elevated volatility and regulatory uncertainty.

For ETFs, the ProShares Ultra TSLA (TSLI) (-4.38%) and Direxion Daily TSLA Bull 2X Shares (TSLL) (-5.28%) offer leveraged exposure, but their steep declines today suggest caution. A short-term bearish strategy could pair TSLA20260102C465 with a short position in TSLI to hedge against a rebound.

Backtest Tesla Stock Performance
The backtest of Tesla (TSLA) after an intraday plunge of at least -3% from 2022 to the present shows favorable short-to-medium-term performance. The 3-day win rate is 51.24%, the 10-day win rate is 51.86%, and the 30-day win rate is 55.58%, indicating a higher probability of positive returns in the immediate aftermath of such events. The maximum return during the backtest period was 8.81%, which occurred on day 58 after the event, suggesting that TSLA can offer decent gains even after a significant pullback.

Tesla at Crossroads: Regulatory Risks vs. Long-Term Bull Case
Tesla’s near-term outlook hinges on its ability to navigate regulatory scrutiny and restore investor confidence in its autonomous technology. The 460 support level and 425.55–430.92 200D support/resistance zone will be critical in determining whether the selloff stabilizes. Meanwhile, Mobileye’s 1.87% gain highlights the sector’s shifting dynamics. Aggressive traders should monitor Tesla’s options chain for volatility spikes, while long-term bulls must weigh the 390.56 P/E ratio against the company’s 52-week high of $498.83. If the 460 level breaks, the TSLA20260102C465 call offers a high-leverage bearish play. For now, the message is clear: regulatory clarity and execution will define Tesla’s next chapter.