Trading Strategies For Tesla Stock Before And After Q3 Earnings

Tesla, Inc TSLA was trading lower Wednesday as the company kicks off big tech earnings season with its quarterly report after the close.

When Tesla printed a second-quarter revenue beat on April 19, the stock plunged the following session over 10% lower and entered a steep downtrend, declining an additional 19.2% to reach a bottom of $212.36 on Aug. 18.

For the second quarter, Tesla reported revenue of $24.93 billion, which beat the $24.48-billion consensus estimate. The company reported earnings per share of 91 cents, beating the Street estimate of 82 cents. Despite headwinds during the quarter, Tesla reported record deliveries.

For the third quarter, analysts, on average, estimate Tesla will report earnings per share of 73 cents on revenues of $24.38 billion.

Tesla produced 430,488 vehicles during the third quarter, down from the 479,700 the company produced in the second quarter. The EV giant said the decline in vehicle production was due to factory upgrades. Read more here...

Ahead of the event, two analysts weighed in on Tesla stock Monday. Piper Sander maintained an Overweight rating on Tesla and lowered a price target from $300 to $290. Wedbush analyst Daniel Ives reiterated an Outperform rating and maintained a price target of $350.

From a technical analysis perspective, Tesla’s stock looks bearish heading into the event, trading in a downtrend and breaking down from a bearish inside bar pattern. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Traders and Investors looking to play the possible upside in Tesla stock but with diversification may choose to take a position in the AXS 2X Innovation ETF TARK.

TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of Cathie Wood-led ARK Innovation ETF ARKK, the latter which holds a 9.97% weighting of Tesla.

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The Tesla Chart: Tesla confirmed its downtrend remains intact Wednesday by dropping to a new low and breaking down from Tuesday’s mother bar. The stock’s most recent lower high was formed on Tuesday at $257.18 and the most recent confirmed lower low was printed at the $248.48 mark the day prior. 

• Shortly after the market opened Wednesday, Tesla attempted to break up through the eight-day exponential moving average (EMA) but failed. The eight-day EMA is now crossing under the 21-day EMA, which is bearish. 
• If Tesla receives a bearish reaction to its earnings print, the stock may trend toward the 200-day simple moving average, which is likely to act as support at least temporarily. If the stock receives a bullish reaction, the downtrend will likely be negated and traders can watch for the eventual formation of a higher low to confirm a new uptrend. 
• Tesla has resistance above at $254.98 and at $271.71 and support below at $234.35 and at $225.03.