EXCLUSIVE: Tesla Earnings To Test 'Pricing Power,' AI Ambitions Against Rising Competition

With Tesla Inc‘s TSLA earnings report fast approaching, stock traders are gearing up for a wild ride. From concerns over margins to Tesla's AI ambitions, plenty is at stake, and traders are split on what to expect.

In an exclusive interview with Benzinga, Ed Egilinsky, managing director at Direxion, offered insight into what metrics traders are watching and how they're positioning themselves for the next big move.

Exclusive Insight: Gross Margins, Pricing Power Under The Microscope

"There will be a focus on several metrics with auto gross margins being top of mind," said Egilinsky. As Tesla faces pressure from domestic and foreign competitors, traders eagerly await additional data.

"Traders will be focusing on any signs that pricing power has returned or stabilized, along with any update on the timing of lower-priced models," Egilinsky said, highlighting the tension around Tesla's pricing strategy.

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Competition, Margin Pressure Weigh On Tesla Stock Sentiment

Egilinsky emphasized rising global automotive rivalry as another key issue, noting, "Increasing competition, both with U.S. automakers, most recently with GM’s earnings announcement, as well as domestic carmakers in China taking market share away from Tesla might hamper its growth outlook."

While the stock has rebounded from earlier lows, margin pressure is leading some bears to position for further declines. "Some feel that the stock's current valuations are stretched and are positioning themselves for the October stock slide to continue post earnings," Egilinsky said.

AI Ambitions Keep Tesla Bulls Holding On

Despite these challenges, bullish sentiment remains. "We have seen significant inflows into our Direxion Daily TSLA 2X Bull ETF TSLL over the last week," Egilinsky noted. Tesla’s AI ambitions, including robotaxis and autonomous driving, are inspiring long-term optimism.

However, Egilinsky cautioned, "The likelihood that this will be impactful on a broader scale within the tech and auto sectors over the short term is less likely."

For traders, the upcoming earnings will be critical to see if Tesla can balance near-term pressures with its longer-term AI bets.

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Image created using artificial intelligence via Midjourney.