Tesla Motors (TSLA) reports earnings Wednesday after the bell, and … well, God help you if you have motion sickness.
Because for Tesla stock holders, Wednesday is going to be a stomach-churning day.
What’s not so clear, though, is whether that’s going to be the stomach churn you get while enjoying the hill of a thrill ride, or the one you get after copious drinking and questionable late-night food choices.
So, let’s run down what we might see Wednesday afternoon, and take a look at a couple options trades on Tesla stock if you have an itchy trigger finger.
Tesla Earnings Expectations
First, let’s take a look at Wall Street analyst targets for the TSLA report:
- Adjusted earnings of 10 cents per share, down roughly 17% from 12 cents per share in the year-ago period.
- Revenues of $699.10 million, up 24.4% from the year-ago’s $561.7 million.
- Deliveries of 6,500 Model S units, which is actually a bit more than Tesla’s own estimates of 6,400.
That last point is a particularly prickly one in that it also could include a decline in North American sales. But that might not necessarily be a bad thing, as Tesla is actively working on reducing its bottleneck overseas. ValueWalk’s Vikas Shukla also has noted that investors probably will be listening for progress on Elon Musk’s previous comments about Tesla building out its production line.
Meanwhile, investors should be aware that Tesla earnings estimates have been sliding for months. Ninety days ago, analysts expected Tesla to earn 25 cents per share in the quarter ended in March. That number dipped to 13 cents two months ago and slowly declined to the current dime per share.
The repeatedly lowered bar certainly makes a beat more achievable … but makes it all the likelier that Wall Street won’t stand for a miss.
So … What Else Is Up at Tesla?
Since we last checked in on Tesla stock, meaningful headlines have been unusually few and far between. The Federal Trade Commission showed support for Tesla’s direct sales model, and CEO Elon Musk should have had (or soon will have) talks with Chinese refiner Sinopec about building charging stations. Positive developments, sure, but not exactly blockbuster, narrative-altering headlines.
Tesla trading itself has been more eventful. While Tesla stock itself is roughly flat since early April, it has done so in a roller-coaster fashion. Currently, it’s in the midst of a week-long upswing as TSLA heads toward its earnings report.
It’s that point — combined with the southward-moving earnings bar, as well as Tesla’s still-sky-high valuation during a time where Wall Street has apparently begun to care about overvalued tech — that has me a little pessimistic heading into the Tesla earnings report, and worried that a miss could trigger more selling in Tesla stock.