Trading Strategies For Tesla Stock Before And After Q1 Earnings

Tesla, Inc TSLA gapped down almost 3% to start Wednesday's session, where the stock ran into a group of buyers who drove it higher. Tesla is set to print its first-quarter financial results after the market closes.

When Tesla printed fourth-quarter earnings on Jan. 25, the stock rallied almost 11% the following day, and continued in an uptrend until Feb. 16, when the stock topped out at $217.65. Between that date and Wednesday, Tesla has declined over 16%.

For the fourth quarter, Tesla reported revenue of $24.32 billion, which marginally beat the $24.16-billion consensus estimate. The company reported earnings per share of $1.19, beating a consensus estimate of $1.13.

For the first quarter, analysts, on average, estimate Tesla will report earnings per share of 85 cents on revenues of $23.29 billion. Tesla reported on April 2 that it delivered 422,875 vehicles in the first quarter and produced 440,808 units.

Ahead of the event, RBC Capital analyst Tom Narayan maintained an Outperform rating on Tesla and dropped the price target from $223 to $217. The market widely expects Tesla to post its slowest revenue growth since 2020. Read more here...

From a technical analysis perspective, Tesla’s stock looks neutral heading into the event, having settled into a sideways trading pattern on the daily chart. 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. A company’s guidance for subsequent quarters, which is often provided during a conference call, can also heavily affect a stock’s direction.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Tesla Chart: When Tesla dropped lower on Wednesday, the stock failed to form a lower low, which caused Tesla to continue trading in its sideways pattern. The pattern has been forming on decreasing volume, which suggests a big move could be on the horizon — likely to take place in the after hours on Wednesday.

• Tesla has been trading sideways in a tight trading range between $177 and $190 since April 5. Within the horizontal pattern, Tesla has been making a series of lower highs and higher lows, which also indicates a large move is ahead.
• On Wednesday, Tesla was looking to print a bullish Marubozu candlestick, indicating the next higher low may have occurred. This leans slightly bullish for Thursday’s price action.
• If Tesla receives a bullish reaction to its earnings print, traders want to see the stock regain the eight-day and 21-day exponential moving averages, which could indicate a new uptrend will form. Bearish traders want to see the stock fall under the $177 mark, which will negate the sideways pattern and cause a downtrend to confirm.
• Tesla has resistance above at $190.41 and $200.51 and support below at $177.59 and $166.71.

Read Next: Tesla's Mind-Blowing Tech is Supercharging Robots and Paving The Way For Smarter AI

Photo via Shutterstock.