TSLA Earnings Prediction: Is Beating Estimates Going To Be Enough?

As many of you know, Tesla is releasing their Q3 earnings report this Wednesday (October 20^th) after market close. Over the past 12 quarters of earnings releases Tesla has traded down 80% of the time with an average loss in the next trading session of 2.7%, and the other 20% of the time, Tesla traded up after earnings, with an average increase of 0.9%. So historically they have performed relatively poor when it comes to earnings, however, I am setting out to find if this earnings report will beat the odds and launch Tesla’s stock close to their previous high of $900/share.

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TSLA stock as it is up 50% over the past 5 months (averaging a monthly return of 8.4% during this timeframe). Additionally, the TSLA stock is up 7% over the past 5 trading days, which is a large return during this small timeframe. As a result of their performances over the past 5 months (and 5 days), there are currently a lot of eyes on the TSLA stock, and there is a lot of hype around their upcoming earnings report. However, since it has been hyped up over the past week it might take a large earnings beat to push the stock higher than it is trading for today.

Q2 2021 Earnings Report:

I think that it is very important to understand Tesla’s performance in their previous earnings report and the reaction that ensued on the next trading day. Furthermore, I think it is important to see the points that they highlighted as key contributors to their earnings and the factors that may have hurt their earnings.

TSLA beat earnings in Q2 2021 by a wide margin, reporting an EPS of $1.45 compared to the estimated $0.98, and reporting revenues of $11.96B in comparison to their estimated revenues of $11.3B. There were also other factors in these earnings that are important, however, these 2 key metrics lead to the earnings beat, which resulted in TSLA opening 0.9% higher the next trading day, and closing down 2% at the conclusion of the next trading day. This is important to note as even when TSLA has a great earnings report, they can still trad lower the following day, which will be important for investors to know come the October 21^st trading day.

Net Income Attributable to Shareholders:

Based on historical percentages of net income to net income attributable to shareholders, I can conclude that Net Income Available to Shareholders for Q3 2021 should be $1.48B

EPS:

Since there are 990M shares outstanding, Tesla’s EPS should be $1.50 which would represent Tesla meeting their Q3 earnings estimates.

Overall Thoughts:

Based on my calculations, Tesla should narrowly beat their earnings. This should be good for the stock; however, we have seen what has happened to Tesla in previous earnings beats.

I think that Tesla will open the following trading day up between 0.5-1% and fall to even or even -0.5% by the close.