Tesla's Momentum Might be Ahead of Fundamentals

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The leading electric vehicle (EV) manufacturer prepares to disclose its second-quarter financial results on Wednesday, July 19, after the market closes. Investors have received preliminary information regarding earnings, with the company reporting production figures of 479,700 vehicles and deliveries totalling 466,140 vehicles during the quarter. The lion’s share of these sales was from the Model 3 sedan and Model Y crossover, the company’s two mainstream vehicles. This surpassed the expectations of Wall Street analysts, who had projected 445,924 deliveries, resulting in an approximately 7.5% beat by Tesla.

But while Tesla was able to sell a record number of vehicles worldwide in the second quarter, the company also adopted an aggressive pricing strategy that is expected to affect some of the company’s margins. Thus, while Tesla did sell more vehicles than ever before in Q2, its profit margin per vehicle sold likely declined in the quarter.

Over the weekend, Tesla announced the completion of its initial Cybertruck production at the Giga Texas facility. Mass production of this electric vehicle is anticipated to commence either towards the end of 2023 or at the beginning of 2024. However, the pricing range for the Cybertruck remains undisclosed. In 2019, the company had provided an estimated starting price between $40,000 and $70,000. It is important to note that this pricing range is subject to change due to various factors, including the upward trend in battery material costs.

Let’s examine three key aspects investors should monitor closely during the upcoming earnings report.

Revenue: Analysts have projected revenue to reach $24.76 billion, indicating a year-over-year growth of 46.22% and a quarter-over-quarter growth of 6.22%. Additionally, a GAAP earnings per share (EPS) estimate of 68 cents and an adjusted EPS of 82 cents have been forecasted. The GAAP EPS estimate suggests a year-over-year growth of 4.5%, while the adjusted EPS implies growth of 8.38%.

Guidance: Of equal significance to current quarter revenue and EPS is the guidance provided by the company. For the third quarter, analysts anticipate revenue of $25.76 billion, signifying a year-over-year growth of 20.11%. This indicates a noticeable deceleration in growth compared to the second quarter. In the fourth quarter, revenue is projected to grow by 11.33% to $27.07 billion, resulting in full-year 2023 revenue of $101.10 billion. This would represent a year-over-year increase of 24.11%, in contrast to the 51.35% growth experienced in 2022. Moreover, the adjusted EPS for the third quarter is expected to be 87 cents, while for the fourth quarter, it is projected to be 96 cents, leading to a full-year 2023 adjusted EPS of $3.53.

Source: TradingView

Tesla shares have enjoyed an impressive rally this year, driven by multiple factors including Q1 performance, Q2 deliveries, and deals involving the company’s Supercharging network with the likes of Ford, General Motors, and Rivian. Nonetheless, analysts are focused on the impact of the price cuts on the Q2 gross margin.

Tesla’s stock closed at $290.38 per share on Monday, extending its market capitalization beyond $900 billion. From its 6 th of January 2023 low the price has soared 190%. This certainly has investors wondering if it’s time to buy or sell the stock heading into earnings report on Wednesday. While Tesla could beat earnings expectations, holding on the stocks could be rewarding in the long-term only if the company can offer favourable guidance.

From a technical analysis perspective, the intermediate term up trend for the first half of 2023 has exhibited rapid and significant advance. However, this alone does not guarantee a reversal in the trend and shorting a stock solely based on its seemingly excessive rise and overbought momentum conditions might be premature.

Nonetheless, the daily chart indicate vulnerability in Tesla’s rally at its current price levels. This vulnerability coincides with the significant overhead resistance of $309, the overbought and diverging momentum conditions, the upcoming earnings report, and a significant monthly options expiration on the 21 st of July. The earnings report alone could be a binary event that could result in substantial price movement in either direction or even a volatile swing in both directions before settling on a definitive directional move.

Active traders looking for magnified ways to short Tesla may consider our -3x Short Tesla ETP.

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Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Sandeep Rao


Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

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Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Oktay Kavrak

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Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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