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3 ETFs For Tesla Earnings

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3 ETFs For Tesla Earnings

Electric vehicle producer Tesla (NASDAQ: TSLA) reports first-quarter results Wednesday after the close, and while those numbers are expected to be weak because of the coronavirus, analysts remain mostly enthusiastic about the company's long-term prospects.

Wall Street is expecting Tesla to post a loss of $1.22 a share for the first three months of 2020, but some analysts believe that number will be beaten and that with an ensuing rally, Elon Musk's company could qualify for entry into the S&P 500.

Assuming that occurs, a rally could be further fueled by index funds, exchange traded funds and active managers that benchmark to that index.

Analysts are forecasting deliveries of 400,000 this year and that guidance could be weak, comparatively speaking, due to COVID-19. Still, with the recent batch of ratings on Tesla being mostly bullish, it could pay to consider the following ETFs.

ARK Autonomous Technology & Robotics ETF (ARKQ)

One of the kings of the Tesla ETF fray, the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ) allocates almost 13% of its weight to the stock. That's been enough to send ARKQ higher by 3.23% year-to-date, which sounds modest, but that showing is downright impressive relative to the Nasdaq-100 Index and the S&P 500.

Few, if any, active management teams are as bullish on or sink with Tesla as ARK. The. team recently addressed total cost of ownership for electric vehicles, which is becoming a relevant point with oil prices slumping.

“According to ARK’s research, over a three-year period the Long-Range Tesla Model 3 is already less expensive to own than a Toyota Camry, and the low-end Model 3 less expensive than a Ford Focus,” according to ARK.

“The TCO is much more sensitive to a vehicle’s residual value than to gas prices. In our view, the right question is how low the prices of used gas-powered cars will go as the market transitions first to electric vehicles, and then to autonomous electric vehicles.”

First Trust NASDAQ Global Auto Index Fund (CARZ)

Somewhat quietly, the oft-overlooked First Trust NASDAQ Global Auto Index Fund (NASDAQ: CARZ) lays claim to having the largest Tesla exposure — and the competition isn't all that close. Tesla accounts for 23.53% of the CARZ, an advantage of roughly 400 basis points over the ETF with the second-largest weight to the stock.

CARZ tracks the NASDAQ OMX Global Auto Index. While the Tesla exposure is impressive, it hasn't been enough to prevent the ETF being burned by lagging traditional automotive holdings, as highlighted by the fund's 19.16% year-to-date decline.

Global X Lithium & Battery Tech ETF (LIT)

The Global X Lithium & Battery Tech ETF (NYSE: LIT) allocates 14.35% of its weight to Tesla, a total surpassed by just three other ETFs, including the aforementioned ARKQ and CARZ. Interestingly, Tesla isn't LIT's largest holding. That title is occupied by Albermale (NYSE: ALB). Combined, those two stocks command about one-third of LIT's weight.

By the end of 2021, the lithium market will return to balance as demand growth resumes from increased electric vehicle adoption and other batteries and eats up new supply,” writes Morningstar analyst Seth Goldstein.

Photo courtesy of Tesla. 

 

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