Tesla Prepares to Unveil Q3 Earnings Amid Mixed Investor Sentiment

Electric carmaker Tesla Motors TSLA is set to release its third-quarter results for 2024 on October 23, after the markets close.

Over the last three months, Tesla’s stock has declined by 13%, slightly better than the average drop of 14.8% within the industry. The company’s recent Robotaxi event didn’t meet investor expectations, leading to a roughly 9% drop in shares since October 10. However, a strong earnings report could reverse this downward trend. Notably, Tesla has experienced a positive revision in earnings estimates for the upcoming quarter, which is often an indicator of better-than-expected results (read: Time for Uber-Lyft ETFs After Tesla’s Unimpressive Robotaxi Event?).

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Exchange-traded funds (ETFs) that heavily invest in Tesla, such as Direxion Daily TSLA Bull 2X Shares TSLL, ARK Innovation ETF ARKK, Consumer Discretionary Select Sector SPDR Fund XLY, Simplify Volt Robocar Disruption and Tech ETF VCAR, and ARK Autonomous Technology & Robotics ETF ARKQ, are attracting attention as the earnings report approaches.

Analyzing Earnings Expectations

Tesla holds an Earnings ESP of -1.28% and a Zacks Rank of #2 (Buy). This combination suggests that while the odds may not favor an earnings surprise, many are still hopeful. Positive revisions right before earnings can often signal good news, with analysts having raised estimates by a penny over the past week. The Zacks Consensus Estimate predicts a significant year-over-year earnings decline of 12.1% but includes projected revenue growth of 9.5%. However, over the last four quarters, Tesla’s average earnings surprise has been negative at 7.99%.

Stay updated on the latest EPS estimates and surprises with Zacks Earnings Calendar.

Tesla, Inc. Price, Consensus and EPS Surprise

Tesla, Inc. price-consensus-eps-surprise-chart | Tesla, Inc. Quote

Deliveries on the Rise

This month, Tesla announced a rebound in delivery numbers for Q3, marking its first growth after two quarters of decline. The company delivered 462,890 vehicles globally, comprised of 439,975 Model 3/Y and 22,915 other models, reflecting a 6.4% year-over-year increase. This was a significant moment, as it was the third-largest quarterly figure in the company’s history. However, deliveries fell short of the anticipated 463,310 by analysts at FactSet. Tesla managed to produce 469,796 vehicles during the quarter, indicating that its demand-boosting strategies are beginning to pay off.

Key Developments to Monitor

Investors are particularly interested in Tesla’s plans for an affordable EV priced under $30,000 and its long-term ambitions for the Cybercab following recent disappointments with the Robotaxi event.

On October 10, Tesla CEO Elon Musk revealed prototypes of the Cybercab, which aims to offer a self-driving experience priced under $30,000, with production projected to start in 2026. In addition, a Robovan concept was introduced, designed to autonomously transport up to 20 passengers. Both vehicles represent Tesla’s efforts to carve out a niche in the self-driving market. The Cybercab aspires to be a more budget-friendly choice for those looking to use or lease these vehicles through Tesla’s network.

Unlike competitors such as Waymo, Tesla plans to use its camera-based Full Self-Driving (FSD) technology, which avoids the need for costly lidar and radar systems. New, lower-priced EV models are expected to be introduced as early as 2025, produced on Tesla’s next-gen platform and at the same sites as its current vehicles.

Spotlight on ETFs

Direxion Daily TSLA Bull 2X Shares (TSLL)

With assets under management (AUM) of $2.1 billion, Direxion Daily TSLA Bull 2X Shares is the largest single-stock ETF listed in the U.S. It aims to deliver 200% of the daily percentage change of Tesla’s stock and charges 86 basis points in annual fees.

ARK Innovation ETF (ARKK)

ARK Innovation ETF actively invests in companies benefiting from technological advancements and scientific innovations across various sectors. Tesla is the fund’s largest holding at 13%, with the fund’s total AUM at $5.6 billion and an annual fee of 75 basis points.

Consumer Discretionary Select Sector SPDR Fund (XLY)

By tracking the Consumer Discretionary Select Sector Index, the Consumer Discretionary Select Sector SPDR Fund provides exposure to numerous consumer discretionary companies. Tesla accounts for 12.5% of the 50 holdings in the fund, which has an AUM of $19.8 billion and charges just 9 basis points yearly. It is rated as a Zacks ETF Rank #2, indicating a Medium risk outlook.

Simplify Volt Robocar Disruption and Tech ETF (VCAR)

Simplify Volt Robocar Disruption and Tech ETF is an actively managed fund seeking concentrated exposure to leading autonomous driving technology. It includes a call option strategy to enhance performance during significant movements in Tesla’s stock, while still holding a diversified tech index.