Tesla Q2 Earnings: Is it Time for the EV Maker to Join the Stock Market Rally?
Tesla Q2 Earnings: Is it Time for the EV Maker to Join the Stock Market Rally?
Deliveries in the quarter were down 14% from a year ago, but stats indicate a move higher could be in the offing
- Tesla is scheduled to report earnings on Wednesday.
- The stock has underperformed the market this year amid political strife.
- The options market expects a +/- 23 point move on earnings, or 7% of the stock price.
Tesla (TSLA) will report second quarter fiscal earnings after the market closeon Wednesday. The electric vehicle maker’s stock price is down about 18% from the start of the year compared to a 7% increase for the S&P 500. It was also down to start the week despite the Nasdaq moving into new highs.
Elon Musk, Tesla’s chief executive officer, has been embroiled in a political battle with President Donald Trump after leaving his role at the Department of Government Efficiency (DOGE).
Analysts sounded the alarm over Musk’s venture into a fraught political scene, a move that put a political branding on Tesla vehicles. The company’s second-quarter deliveries dropped 14% from a year ago, and sales in Europe have also remained underwhelming.
Investors are keenly awaiting news on Tesla’s robotaxi service that’s in pilot tests in Austin, Texas. Musk said the company will offer the robotaxi service in the San Francisco Bay area next, but the company hasn’t initiated the permitting process. Investors will want to hear how plans for expanding the service are progressing.
What do analysts expect?
According to TradingView, analysts anticipate Tesla will post an earnings per share (EPS) of $0.39 on $22.2 billion in revenue. That would be down from an EPS of $0.52 on $25.5 billion in revenue a year ago.
Last quarter, Tesla reported an EPS of $0.27 on $19.34 billion in revenue. Tesla has logged a disappointing streak of results vs. expectations over the last year, with the company missing on EPS and revenue in three of the last four quarters.
Ratings of the stock are mixed, with 24 “strong buy” and “buy” ratings, 20 “hold” ratings and 11 “strong sell” ratings. The one-year price target was at 313.66, marking a 4.5% decline from Monday’s stock price of 328.80.
Trading Tesla earnings
Given Tesla’s underperformance against the market as of late, the post-earnings reaction may just need to avoid the worst-case scenario for the stock to rally.
An upside reaction could see possible resistance at the recent swing highs from May and June at 367 and 357. Alternatively, the swing lows from June and earlier this month at 273 and 288 may come in as support.
The implied volatility rank (IVR) was at 18.2 today, meaning volatility is well below average compared to the last month of trading. The options market sees an expected move of +/- 23 points, or 7%. That’s within the average range of 5% to 10% for earnings moves in S&P 500 companies.
Technically, Tesla looks like it could be gaining some momentum for a move higher. Prices recently traded above the 50-day simple moving average (SMA) and are above the 9- and 21-day exponential moving averages.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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