Tesla, Inc TSLA was trading mostly flat Wednesday as the company kicks off big tech earnings season with its quarterly report after the close.
When Tesla printed a third-quarter earnings miss on Oct. 18, the stock plunged the following session over 9% lower and entered a steep downtrend, declining an additional 11.83% to reach a bottom of $194.07 on Oct. 31
For that quarter, Tesla reported revenue of $23.35 billion, which missed the $24.38-billion consensus estimate. The company reported earnings per share of 66 cents, missing the Street estimate of 73 cents.
For the fourth quarter, analysts, on average, estimate Tesla will report earnings per share of 74 cents on revenues of $25.59 billion.
Tesla delivered 484,507 vehicles during the fourth quarter, exceeding the Streets estimate of 480,000 deliveries. Read more here...
Read Next: Tesla Gears Up For Q4 Print; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call
Traders and investors will be paying particular attention to Tesla’s margins and profitability during the fourth quarter. Crypto enthusiasts may also be interested in whether Tesla positioned itself for the SEC’s approval of the first spot Bitcoin ETF by adding to its digital asset holdings during the fourth quarter.
Traders looking to play the potential upside in Bitcoin BTC/USD, without taking a position in Tesla could choose to do so through the Grayscale Bitcoin Trust ETF GBTC.
GBTC is highly liquid, offering traders and investors a high level of flexibility to manage their trades, with an average 30-day trading volume of over 14 million shares.
From a technical analysis perspective, Tesla’s stock looks bearish heading into the event, trading in a downtrend and forming a possible bear flag 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 downside in Tesla stock but with diversification may choose to take a position in the AXS Short Innovation Daily ETF SARK. SARK is an actively managed ETF aiming to inversely track the daily performance of Cathie Wood-led ARK Innovation ETF ARKK, the latter which holds a 7.64% weighting of Tesla.
For traders bullish on Tesla, AXS 2X Innovation ETF TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of ARKK.
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The Tesla Chart: Tesla’s possible bear flag pattern was formed between Dec. 28 and Wednesday, with the downward sloping pole formed between Dec. 28 and Monday and the flag forming since. The measured move, if the pattern is confirmed with a sharp drop on higher-than-average volume, is about 21%, which suggests the stock could fall toward $171.
- Tesla is trading in a confirmed downtrend, making a series of lower highs and lower lows. The most recent lower high was formed on Monday at $217.80 and the most recent lower low was printed at the $206.27 mark on that same day.
- On Jan. 11, Tesla dropped under the 200-day simple moving average (SMA), which threw the stock into a bear cycle. If Tesla continues to trade under that area, the 50-day SMA will eventually cross below the 200-day, which will cause a death cross to form on the stock’s chart.
- Bullish traders want to see Tesla receive a positive reaction to its earnings print and for the stock to surge up and regain support at the 200-day SMA. Bearish traders want to see Tesla drop under Monday’s low on high volume, which could thrust Tesla under the $200 psychological support level and accelerate downside pressure.
- Tesla has resistance above at $213.13 and at $225.03 and support below at $200.51 and at $190.41.
- Image sourced from Shutterstock
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