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Tesla (TSLA) Stock Climbs 2.75% Ahead of Q2 Earnings: What To Watch

Shares of Tesla (TSLA) popped 2.75% during regular trading hours Tuesday, which means investors might be anticipating good things from the electric vehicle company's second-quarter financial results. Let's see what they should really expect.
Shares of Tesla (TSLA) popped 2.75% during regular trading hours Tuesday, which means investors might be anticipating good things from the electric vehicle company's second-quarter financial results. Let's see what they should really expect.
Benjamin Rains

Shares of Tesla TSLA popped 2.75% during regular trading hours Tuesday, which means investors might be anticipating good things from the electric vehicle company’s second-quarter financial results. Let’s see what they should really expect.

Tesla and CEO Elon Musk have been in the news constantly over the last few years. However, talk about Tesla has turned more negative recently despite the firm finally surpassing its Model 3 production goals for the first time in the last week of Q2. Investors and analysts have grown more concerned that Tesla will likely have to seek more outside funding, a possibility highlighted by its recent supplier refund requests.  

Furthermore, the fact that General Motors GM, Volkswagen VLKAY, Ford F, Toyota TM, and other established automakers have started to invest in their own electric vehicle futures does not help the situation. But, Tesla’s Q2 revenues are projected to climb by nearly 36% to hit $3.79 billion, based on our current Zacks Consensus Estimate. Meanwhile, Tesla is projected to report an adjusted second-quarter loss of $2.71 per share—which is far greater than the year-ago period’s loss of $1.33 per share.

With that said, we also need to gauge how likely Tesla is to outperform its earnings estimate. Luckily we can turn to our exclusive Earnings ESP figure to do so.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Tesla’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for a loss of $2.75 per share, which is four cents worse than our current consensus estimate. This figure helps TSLA sport an Earnings ESP of -1.66% and a Zacks Rank #3 (Hold), which means our model is inconclusive. But, Tesla has fallen short of our earnings estimates in eight out of the last 10 quarters.

Tesla stock also has a history of trading wildly up and down following the release of its quarterly earnings results.

Make sure to check back here for our full analysis of Tesla’s actual Q2 results after market close on Wednesday!

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