Tesla Inc. TSLA hovered around $208 per share on Tuesday, after reaching its lowest level in over two months the previous day, and before its earnings report scheduled for release after Wednesday’s market close.
Since Dec. 28, 2023, the Austin, Texas-based manufacturer has witnessed a notable decline of more than 20% in its stock value. This plunge has pushed the company into what traders commonly refer to as a bear market, a situation that typically signals a downturn in investor confidence.
Tesla Technical Analysis
The Relative Strength Index (RSI), a widely acknowledged momentum indicator, continues to signal oversold conditions for Tesla’s stock. However, Tesla’s current technical scenario is not just a straightforward narrative of decline.
Such oversold RSI indicators have often preceded periods of bullish market sentiment for Tesla. In 2023 each of the three instances when Tesla’s stock hit an oversold RSI, it marked the beginning of an upward trend.
Moreover, earlier this month, Tesla’s stock also witnessed a dip below its 50-day and 200-day moving averages. This development is critical as it is often viewed by market analysts as a sign of ongoing downward pressure.
However, it’s also worth noting that similar occurrences in 2023 have often created compelling ‘buy the dip’ opportunities. Such was the case in October 2023 and during April and May of the same year.
What Analysts Expect
Median forecasts among Wall Street analysts expect that Tesla will report revenues of $25.76 billion in the fourth quarter of 2024, reflecting a growth rate of approximately 6% compared to the same quarter of the previous.
However, when it comes to earnings per share (EPS), there is a different story. Analysts project a median EPS of $0.61 on a GAAP basis, representing a significant decline of approximately 42.7% from the previous quarter. On a non-GAAP basis, the median EPS expectation is $0.74, which still reflects a notable decrease of about 38.2% compared to the previous year.
| Metrics | Analysts median expectations (Q4 2023) | Growth vs. Q4 2023 |
|---|---|---|
| Revenues ($) | $25.76 bn | 5.94% |
| EPS GAAP | $0.61 | -42.7% |
| EPS | $0.74 | -38.2% |
How Did Tesla React To Prior Earnings Releases?
- Over the past 12 earnings reports, Tesla has managed to beat earnings estimates nine times. However, the subsequent reaction to the earnings reports has been mixed.
- In seven out of 12 instances (58%), Tesla’s stock experienced a negative reaction to the reported earnings.
- The worst one-day reaction occurred on Jan. 26, 2022, following the results for the fourth quarter of 2021, when Tesla’s shares plummeted by 11.6%.
- The best one-day reaction took place on Jan. 25, 2023, following the results for the fourth quarter of 2022, when Tesla’s shares surged by 11%.
- In conclusion, the fourth quarter earnings report appears to represent an event of extreme volatility for the shares of the electric vehicle giant.
| Fiscal Period | Report Date | Reported EPS | Surprise (%) | 1-Day Stock Reaction (%) |
|---|---|---|---|---|
| 3Q 2023 | 10-17-2023 | $0.66 | -9.81% | 0.37% |
| 2Q 2023 | 07-19-2023 | $0.91 | 11.12% | -9.74% |
| 1Q 2023 | 04-19-2023 | $0.85 | -0.43% | -9.75% |
| 4Q 2022 | 01-25-2023 | $1.19 | 7.20% | 10.97% |
| 3Q 2022 | 10-19-2022 | $1.05 | 5.23% | -6.65% |
| 2Q 2022 | 07-20-2022 | $0.76 | 26.90% | 9.78% |
| 1Q 2022 | 04-20-2022 | $1.07 | 42.31% | 3.23% |
| 4Q 2021 | 01-26-2022 | $0.85 | 6.88% | -11.55% |
| 3Q 2021 | 10-20-2021 | $0.62 | 15.22% | 3.26% |
| 2Q 2021 | 07-26-2021 | $0.48 | 49.86% | -1.95% |
| 1Q 2021 | 04-26-2021 | $0.31 | 19.42% | -4.53% |
| 4Q 2020 | 01-27-2021 | $0.27 | -23.91% | -3.32% |
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