Tesla (TSLA) Stock Heats Up Ahead of Earnings

  • Tesla (TSLA) is rising again on hopes for a stock buyback.
  • Shares of TSLA stock now trade at about half of last November’s peak price.
  • Bulls see the current forward price-earnings (P/E) ratio as cheap.
Tesla (TSLA) badge on steering wheel of car
Source: Christopher Lyzcen / Shutterstock.com

Tesla (NASDAQ:TSLA) stock is rising today as the company prepares to announce third-quarter earnings on Oct. 19. Shares climbed about 2% in pre-market trading and are now up more than 5%.

Of course, Tesla is still down more than 40% for 2022 — almost double the loss of the S&P 500 — and down by roughly 50% from its all-time high last November. In particular, TSLA stock has been especially weak due to CEO Elon Musk and his on-again off-again Twitter (NYSE:TWTR) acquisition and on-again off-again support of Ukraine.

As of this writing, Tesla’s market capitalization is about $670 billion. On average, analysts expect sales of $84 billion for full-year 2022, per Yahoo! Finance.

TSLA Stock: Will There Be Buybacks?

In addition to profit, investors will be looking for solid production numbers, battery numbers and possible “demand destruction” from inflation in the upcoming quarterly report. There is also hope that Tesla may buy back up to $10 billion in stock, which would be bullish.

Shares of TSLA stock fell early in October after the company missed delivery targets, although production did nearly meet estimates. That said, production is rising again after a re-tooling of Tesla’s factory in China. Now, deliveries are expected to rise in Q4.

Tesla also remains profitable. Bulls believe the company will generate $22 billion of free cash flow for 2023 — and that it could generate $120 billion per year by 2030 like Apple (NASDAQ:AAPL). The company has an investment-grade credit rating and analysts hope a big buyback will just be the start of it sharing profit with investors.

That said, Musk’s personal behavior is worrying to the bears. Tesla’s price-earnings ratio is currently 35, close to where it was at the bottom of the pandemic. Investors would rather see the company give out its earnings than find something else to do with them.

With some analysts thinking that inflation has peaked, Tesla could be in for a sharp bull run this week. But where it goes from here depends on whether Tesla continues to behave like a tech company and not General Motors (NYSE:GM), which has less than one-tenth of its valuation.

On the date of publication, Dana Blankenhorn held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/tesla-tsla-stock-heats-up-ahead-of-earnings/.

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