Heading into earnings season, Tesla stock (NASDAQ:TSLA) is at its lowest point ever, making it hard to anticipate how investors will respond to the automaker’s third-quarter results on Wednesday.
One thing seems to be certain only. Traders need to be prepared for volatility.
Since the firm released weaker-than-expected third-quarter delivery data, shares of the market leader in electric vehicles have taken a beating. Although Tesla (NASDAQ:TSLA) delivered a record-breaking 343,830 automobiles during the quarter, Wall Street had 360,000 units as their target.
Tesla Stock Latest Trade
After jumping 7% on Monday, Tesla stock was up 2.5% in current trade, closing at $224.87. The market is swaying, and so are the shares. Following a 3.4% increase on Monday, the Nasdaq Composite was up 2.2% in current trade.
The value of Tesla shares has decreased by nearly 23% from the end of the second quarter heading into this week. That represents the company’s shares’ second-worst performance from quarter end to results. The worst result occurred when, prior to that earnings announcement, Tesla shares had fallen by nearly 40% from the end of 2015.
Additionally, since the conclusion of the quarter, Tesla stock has lost nearly 25% of its value in comparison to the S&P 500SPX +0.63%. That is the third-worst outcome in the last ten years and the poorest outcome since the end of 2015. But regardless of how you see the stock’s performance, investors are not optimistic about the third-quarter results.
They first want better-than-expected outcomes. From revenues of $22.2 billion, Wall Street anticipates earnings of around $1 per share. The predicted gross profit margins are 26.6%, up from the 25% reported in the second quarter of 2022. On Wednesday, keep an eye on each of those statistics.
Bulls will also want Tesla to provide some delivery estimates for the fourth quarter. In the third quarter, 365,923 Tesla automobiles were produced. The highest production-to-sales discrepancy recorded was 22,093, which separated production from delivery. Along with all of the automobiles the business produces in October, November, and December, investors want to see those vehicles delivered in the fourth quarter. This ought to result in a strong Q4 figure. For the next fourth quarter, Wall Street anticipates deliveries of around 430,000 units.
Tesla, however, doesn’t often offer any advice; all it typically states is that it plans to increase capacity by 50% annually over the next several years. According to it, there will be around 1.4 million units in 2022 and 2.1 million units in 2023. But it could be sufficient to just reiterate that advice. Both of those numbers are somewhat higher than what Wall Street is estimating.
“A tremendous 4Q performance in the [475,000] unit range will be required to hit the [approximately] 50% annual delivery growth objective for 2022,” Wedbush analyst Dan Ives said in a research previewing results on Tuesday. “The Street [is] laser-focused on whether Musk can maintain this lofty growth objective for the year or will pull off the Band-Aid and set a lower bar for 4Q in the [400,000] area.”
Investors will be interested in learning what caused the third-quarter 22,093 gap in addition to the company’s good current results and outlook. In order to meet local demand, Tesla is stepping up manufacturing at its two new factories in Texas and Germany. But that doesn’t fully explain China’s choice to send more units to Europe in the fourth quarter.
Any information on the 2023-slated Cybertruck or a future, more affordable EV would be notable for both Tesla bulls and bears after those three items.
Following the results, Tesla stock is predicted by options markets to move 7%, either up or down. That might be set too low. Over the last four quarterly releases, the stock has, on average, gone up or down by that much. (During that time, shares increased three times while falling once.) But during the previous month, the volatility of Tesla stock has increased by over 66%. Trading volatility on the Nasdaq Composite has increased by around 17% throughout that time.
It’s difficult to predict if Tesla stock will trend upward or downward following the results. Following the other two relatively bad quarters, Tesla stock fluctuated once upward and once downward.
Featured Image – Megapixl © Wellesenterprises
Author Valerie Remorosa 
