Tesla Stock Declines Ahead of Q3 Earnings: Risks and Opportunities
Tesla Stock Declines Ahead of Q3 Earnings: Risks and Opportunities
The electric-vehicle maker has a lot to prove after its robotaxi introduction failed to impress investors
- Tesla is to announce third-quarter fiscal earnings on Wednesday.
- Analysts expect the to report earnings per share of $0.59 on $25.4 billion in revenue.
- The Robotaxi, other new models and expected wait times are all in question.
Tesla stock drops into earnings
Tesla (TSLA) is scheduled to report third-quarter fiscal earnings after the market closes on Wednesday. The electric-vehicle maker has a lot to prove after its robotaxi failed to impress investors. Since unveiling the “Cybercab” on Oct. 11, Tesla stock is down nearly 9%. Meanwhile, the Nasdaq 100 has traded nearly unchanged.
Investors expect Tesla to post earnings per share (EPS) of $0.59 on $25.4 billion in revenue, according to TradingView. That EPS would be up from last quarter’s $0.52 per share but lower from a year ago. Revenue is expected to cross the wires at $25.4 billion, representing a slight decrease from the previous quarter but higher than a year ago.
What do investors expect?
Investors have several questions on their minds, with the first and foremost being the timeline on delivering Tesla’s more affordable compact EV which is expected to reach showrooms sometime in 2025. The company has previously pushed back delivery dates for new models, which has left investors uncertain about its delivery roadmap.
The feasibility of wide-scale unassisted driving is on the radar. Investors want to know when and how the company expects to launch its unsupervised full self-driving (FSD). Tesla hit a road bump this month after the National Highway Traffic Safety Administration (NHTSA) launched an investigation into its supervised FSD following several crashes involving the feature.
Also, as usual, the company’s auto gross margin minus regulatory credits is also under the microscope. Margins in that segment, which makes up a large chunk of revenue, have slid over the past couple of years. An improvement would likely go a long way for the stock price.
Tesla posted single-digit sales growth, with some help by way of the Cybertruck. However, sales of that vehicle remain a small part of its overall portfolio. Chinese demand could also be pivotal, but with a teaser 0% financing rate in the country, margins could be hurt there.
The company’s wholesale electricity storage business, referred to as “Megapack,” could also boost the stock price, assuming the segment adds to an improvement in gross margins. That business is still too small overall and isn’t reported as a separate segment. However, it could come up on the investor Q&A. Investors may also ask about vehicle wait times, incorporating Grok into Tesla vehicles and overall plans for 2025.
Trading Tesla earnings
Tesla trades with an implied volatility rank (IVR) of 42.8, as of today. The options market expects an implied move of +/- 13.95 points, based on the Oct. 25 options expiration. Based on today’s stock price of 217.75, that equals a percentage move of +/- 6.4%. Given the decent premium in the options complex, investors who want to express a directional view can likely do so through selling a put or call spread, based on their directional assumption.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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