Tesla is slated to report quarterly earnings tomorrow after the market closes.
- Tesla is expected to report earnings per share of $0.77 on $27.14 billion in revenue.
- While it has had a spotty earnings history, both estimates are higher this quarter.
- Earnings expectations are volatile with almost a 10% stock price move expectation this week.
Tesla (TSLA) is set to report quarterly earnings on tomorrow, and the stock market is not taking the announcement lightly. With a stock price of around $400, the market is expecting a +/- 9% stock price move this week. This puts Tesla on the higher end of the implied volatility range for this earnings season.
The company has had a questionable earnings history, beating earnings-per-share (EPS) estimates and revenue estimates just once over the past three quarters. With that said, the market expects Tesla to announce higher EPS and revenue figures this quarter compared to the last earnings call.
In fact, it’s expected to announce an EPS of $0.77 on $27.14 billion in revenue.
After President Trump won the 2024 Election, TSLA stock skyrocketed. That is likely because speculation of Elon Musk’s government involvement was a big copmonent of Trump’s campaign.
With that said, plenty of question marks still surround Tesla as a company and about its plan for growth.
Words of encouragement were shared by executives in the last earnings press release: “Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025. These vehicles will utilize aspects of the next generation platform as well as aspects of our current platforms and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”
The release went on to say “this approach will result in achieving less cost reduction than previously expected, but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times. This should help us fully utilize our current expected maximum capacity of close to three million vehicles, enabling more than 50% growth over 2023 production before investing in new manufacturing lines.”
But it didn’t end there. “Our purpose-built Robotaxi product will continue to pursue a revolutionary “unboxed” manufacturing strategy,” the company said.
While questions remain around Tesla’s future, we look to implied volatility in the options market for more context around this week’s announcement.
Based on current implied volatility, we’re looking at a stock price expected move of +/- $33.74 this week. With the stock price hovering around $400, this is just under 10% of the notional value of the stock price. Huge implied volatility surrounds this announcement. Looking to March, we can see that options cycle boasts a +/- $67.83 expected move. In other words, this week’s announcement makes up for just about half of the expected move through the March expiration cycle. This implied volatility is no joke, and we should expect to see violent moves after the earnings data comes out.
Bullish on Tesla stock for earnings
If you’re bullish on TSLA stock for earnings, you’re looking for numbers that exceed EPS and revenue estimates. The EV company hasn’t posted a double earnings beat over the past three quarters, so that could send the stock higher. Clarity around growth plans in 2025 also wouldn’t hurt.
Bearish on Tesla stock for earnings
If you’re bearish on TSLA stock for earnings, you may think Musk’s government involvement is completely separate from TSLA stock, and the recent rally may fade. This is the first Tesla earnings announcement since the election rally, and the company has had a hard time posting consistent numbers thus far. Weak guidance paired with an earnings miss could send the stock lower.
Tune in to Options Trading Concepts Live tomorrow at 11 a.m. CST ahead of Tesla earnings for a look at some options trading strategies for the earnings call.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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