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Electric carmaker Tesla Motors (TSLA) is scheduled to report third-quarter 2023 results on Oct 18 after market close. Let’s take a closer look at its fundamentals ahead of the earnings release.

Tesla stock has plunged about 13% over the past three months, underperforming the Zacks industry average decline of 8%. The underperformance might reverse if Tesla beats estimates this quarter.

This has put the ETFs having a substantial allocation to this luxury carmaker like Direxion Daily TSLA Bull 1.5X Shares, MeetKevin Pricing Power ETF, Consumer Discretionary Select Sector SPDR Fund, Simplify Volt Robocar Disruption and Tech ETF and Fidelity MSCI Consumer Discretionary Index ETF in focus ahead of Q3 earnings.

Earnings Whispers

Tesla has an Earnings ESP of -2.74% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The electric carmaker saw negative earnings estimate revision of 5 cents over the past 30 days for the to-be-reported quarter. Analysts decreasing estimates right before earnings — with the most up-to-date information possible — is not a good indicator for the stock. The Zacks Consensus Estimate for the third quarter indicates substantial year-over-year earnings decline of 30.5% and revenue growth of 13.6%.

However, the earnings track record of the company is robust. It delivered a four-quarter average earnings surprise of 7.94%.

Tesla currently has an average brokerage recommendation (ABR) of 2.69 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 27 brokerage firms. The current ABR compares to an ABR of 2.69 a month ago based on 27 recommendations.

Of the 27 recommendations deriving the current ABR, seven are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 25.93% and 7.41% of all recommendations. A month ago, Strong Buy made up 25.93%, while Buy represented 7.41%.

Based on short-term price targets offered by 25 analysts, the average price target for Tesla comes to $249.08. The forecasts range from a low of $85.00 to a high of $400.00. The average price target represents a decline of 3.78% from the last closing price of $258.87.

Weak Q3 Deliveries

Earlier this month, Tesla reported weaker-than-expected vehicle deliveries for the third quarter of 2023 due to some planned factory shutdowns.

The leading electric carmaker delivered 435,059 (419,074 Model 3 and Y and 15,985 Model S and X) cars worldwide in the third quarter, up 26.5% from the year-ago quarter and down 6.7% from the prior quarter. The electric carmaker produced 430,488 (416,800 Model 3 and Y, and 13,688 Model S and X) vehicles during the quarter.

ETFs to Watch

Direxion Daily TSLA Bull 1.5X Shares (TSLL)

With AUM of $1.1 billion, Direxion Daily TSLA Bull 1.5X Shares is just more than a year-old ETF and is by far the largest U.S.-listed single-stock ETF on the market today. TSLL offers 1.5 times (150%) the daily percentage change of the common stock of Tesla, charging 95 bps in annual fees. It trades in an average daily volume of 13 million shares.

MeetKevin Pricing Power ETF (PP)

MeetKevin Pricing Power ETF is an actively managed ETF that seeks to achieve its investment objective by investing primarily in U.S.-listed equity securities of Innovative Companies that, in Kevin’s view, have more “pricing power” than their peers. The fund holds a small basket of 16 stocks, with Tesla occupying the top position at 26.7%.

MeetKevin Pricing Power ETF debuted in the space at the end of November last year and has accumulated $38.7 million in its asset base. It charges 77 bps in annual fees and trades in a lower volume of 21,000 shares a day on average.

Consumer Discretionary Select Sector SPDR Fund (XLY)

Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 52 securities in its basket, Tesla takes the second spot with 20.6% of the assets.

Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $16.7 billion and an average daily volume of around 4.8 million shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

Simplify Volt Robocar Disruption and Tech ETF (VCAR)

Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.

Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $4.1 million in its asset base while trading in an average daily volume of 2,000 shares.

Fidelity MSCI Consumer Discretionary Index ETF (FDIS)

Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 300 stocks in its basket. Of these, TSLA takes the second spot with a 15.4% share. Broadline Retail, Hotels, Restaurants & Leisure and Specialty Retail make up for the top three sector holdings.

Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.2 billion in its asset base while trading in a good volume of around 71,000 shares a day on average. Fidelity MSCI Consumer Discretionary Index ETF charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

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