Tesla Q3 Earnings Preview: Will the First Mag 7 Earnings Report Bolster the Market Recovery?
Tesla Q3 Earnings Preview: Will the First Mag 7 Earnings Report Bolster the Market Recovery?
- Tesla is scheduled to report earnings on Wednesday, October 22.
- Lack of regulatory credits to pose a headwind for the EV maker.
- Options traders see a +/- 33.26 points on earnings, or 7.44% of Monday’s stock price.
Tesla to kick off Magnificent 7 earnings on Wednesday, October 22
Tesla (TSLA) is scheduled to report earnings on Wednesday, October 22, after the market close. The electric vehicle maker will be the first company in the Mag 7 to report, offering a critical sentiment check ahead of other big names. International Business Machines (IBM) will also report on Wednesday.
The report comes amid a period of heightened market volatility following last week’s sell off that was prompted by a comment from U.S. President Donald Trump that threatened an escalation in trade tensions between Washington and Beijing.
It’s been a mild month of price action for Tesla, with the stock only up about 0.2% since the start of the month. That compares to the S&P 500’s gain of 0.7% over the same period, which isn’t much better. Still, the stock put in a big 33.2% gain in September to put prices near the December 2024 all-time highs.
Now, prices are less than 10% away from those highs from December that traded at 488.54. The expected move, per the options on TSLA, was at +/-33.26 points as of Monday, October 20. That means that prices could rise to just below that mark from the current price of 446.31, with a gain of 33.26 putting the stock at 479.57, which is within nine points of fresh highs.
What do investors expect?
According to TradingView, investors expect Tesla to report third-quarter earnings per share (EPS) of $0.55 on $26.33 billion in revenue. That would compare to a year ago when Tesla reported EPS of $0.72 on $25.18 billion in revenue.
One of the main headwinds facing the company is the loss of regulatory credits, which should continue to impact sales. Last quarter, Tesla took in $439 million from those credits. That was a 50% decline from the same quarter a year ago.
The tax and spending bill passed in July removed penalties for automakers to comply with the Corporate Average Fuel Economy (CAFE) standards, which removed the incentive for vehicle makers to buy the credits from Tesla.
Analysts expect those credits to disappear completely over the next couple of years. This comes as legacy automakers increase production of their own electric vehicle lines, another theme that will pose a headwind for Tesla.
However, Tesla benefited from the expiration of the $7,500 federal tax credit for EV purchases, as buyers rushed to use it before it expired at the end of September. Tesla sold 497,099 vehicles in its third quarter, a record number. Still, going forward the tax credit won’t be there to help sales.
Trading Tesla earnings
Tesla is sitting 23 points below its 2025 high from October 2 when the stock traded as high as 470.75. Monday’s trading sent prices nearly 2% higher to build some momentum from a positive Friday session. The upper end of the expected move of 33.26 points would put prices just above that level.
Alternatively, the lower end of the expected move would pierce the October low at 411.45 and push prices back into levels traded through September. The 21-day exponential moving average (EMA) offered support to prices on a pullback through last week’s session, and prices are now pulling away from the 9-day EMA as well.
The implied volatility rank (IVR) was at 25.4 as of Monday, meaning that volatility is lower currently compared with the past twelve months of trading. While Tesla is trading near the middle of its October range, earnings could push prices outside of there, opening up prices to areas of potentially lower liquidity, which could introduce more volatility.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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