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Tesla Prepares for Earnings Report Amidst Market Volatility

Key Takeaways

Tesla is set to release its first-quarter earnings after the market closes on Tuesday, with expectations of significant stock movement based on options pricing. Historically, Tesla’s shares have seen an average post-earnings change of 12.3% over the previous four quarters. The company’s stock has faced challenges recently, reflecting a decline of approximately 50% from its peak in December, attributed to slowing electric vehicle (EV) sales and CEO Elon Musk’s controversial political engagements.

As Tesla approaches the anticipated earnings announcement, investors are bracing for substantial fluctuations in the company’s stock price.

Current options trading indicates that market participants are predicting a potential move of about 9.3% for Tesla (TSLA) stock in either direction following the earnings report. This projection could place the stock between $263.82 and $218.92, given that it closed around $241 on Thursday.

Over the past year, Tesla has been known for its significant stock volatility surrounding earnings reports. In the last four quarters, the average post-earnings movement has been 12.3%, with notable variations; the stock surged almost 22% after an earnings report last October, whereas it dropped over 12% following the previous quarter’s results.

Entering this earnings season, investors are facing a climate of uncertainty. While President Trump has suspended some of the tariffs he proposed earlier this month, substantial tariffs on Chinese imports remain intact, alongside contradictory statements about potential exemptions. Economic indicators have generally been robust, although some experts caution that the negative impacts of tariffs may manifest in time.

JPMorgan analysts suggest that the current options market is reflecting some of the most pronounced average implied movements around earnings since the beginning of 2020.

Tesla’s global sales have recently experienced a downturn, reportedly influenced by public backlash against Musk’s vocal and financial support of various international far-right initiatives. Investors are increasingly worried that Musk’s political engagement may distract him from his responsibilities, which could impact Tesla’s market strategies. Moreover, the possibility of Tesla’s foreign market access being leveraged in trade negotiations presents additional concerns.

Following Trump’s re-election campaign, where Musk was a prominent backer, Tesla’s stock nearly doubled within six weeks. However, it has since experienced a sharp decline of around 50%, returning to levels seen prior to the election.

With pressure mounting on Tesla’s EV sales, stakeholders will be keenly watching for optimistic announcements regarding advancements in artificial intelligence, which is viewed as the company’s next growth frontier. Musk may provide updates on the planned launch of Tesla’s inaugural commercial robotaxi service in Austin, Texas, slated for June, and expand on the development of Optimus, Tesla’s humanoid robot, for commercial purposes.

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