Tesla Inc. (NASDAQ: TSLA) steps into the third-quarter earnings confessional Wednesday after the close of U.S. markets. Analysts are expecting that Elon Musk's company will report a loss of 46 cents per share on sales of $6.45 billion. Free cash flow is expected to be $32 million.
California-based Tesla already reported third-quarter deliveries of 97,000 vehicles, which topped estimates, but was also viewed as a disappointing figure.
So there is some burden on Tesla heading into earnings, and it'll be about more than third-quarter results. Any indications the company can give up upside surprises to fourth-quarter deliveries and restoring a path to profitability will likely be well-received by investors.
For investors looking to play Tesla earnings via exchange traded funds, there are some compelling options, including the following funds.
ARK Innovation ETF (ARKK)
Tesla Weight: 11.06%
ARK Investment Management, the fund manager behind the ARK Innovation ETF (NYSE: ARKK), is one of the most noted Tesla bulls in the investment community, a position that has subjected the firm to some criticism on Twitter. To its credit, ARK has been steadfast in its Tesla bullishness.
More importantly, Tesla has long been one of ARKK's top holdings and a major position in some other ARK ETFs —and those funds have performed brilliantly. ARK has a $6,000 price target.
Even with that massive target, the firm has been paring its Tesla exposure this month, though in modest fashion. ARKK is an actively managed fund, so the issuer has the flexibility to alter its positions. Overall, the issuer has recently sold 150,000 shares of Tesla, reducing ARKK's Tesla stake from 12.75% to 11.06%.
VanEck Vectors Low Carbon Energy ETF (SMOG)
Tesla Weight: 9.63%
Tesla accounts for 9.63% of the VanEck Vectors Low Carbon Energy ETF (NYSE: SMOG), making the stock the largest holding in this recently reconfigured fund. SMOG tracks the Ardour Global Index.
That index “is intended to track the overall performance of low carbon energy companies, which are those companies primarily engaged in alternative energy, which includes power derived principally from bio-fuels (such as ethanol), wind, solar, hydro and geothermal sources and also includes the various technologies that support the production, use and storage of these sources,” according to VanEck.
VanEck changed SMOG's investment objective just over three months ago. The fund has been a solid performer this year, gaining almost 19%.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
Tesla Weight: 9%
Another passively managed fund, the First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ: QCLN)'s 9% weight to Tesla stock ranks in the top five among U.S.-listed ETFs. That's a long-held honor for QCLN because the fund is over 12 years old and is also one of the oldest ETF owners of Tesla shares.
The $115.49-million QCLN holds 42 stocks and has a median market value of $2.5 billion, which is low compared to other funds mentioned here.
QCLN member firms include “companies engaged in manufacturing, development, distribution and installation of emerging clean-energy technologies including, but not limited to, solar photovoltaics, biofuels and advanced batteries,” according to First Trust.
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Photo courtesy of Tesla.
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