CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Tesla share price: what to expect from Q2 results

Record deliveries in Q2 prove demand is still robust, but analysts remain at odds over whether the company can deliver returns as price targets continue to vary widely.

When is Tesla’s results date?

Tesla is set to report its earnings on 5 August 2019, and after Q1’s dismal figures and Q2’s record deliveries, there are plenty of differing opinions as to whether it can post a profit.

Last quarter’s figures weren’t easy to digest by any standard, with the company reporting a wider than expected loss, missing revenue estimates, and fears of demand waning following the reduction in the tax credit at the beginning of this year. However, in early July, Tesla posted record deliveries for Q2 that surpassed expectations and, in the process, breathing new hope that the Q1 drop in demand was one-off due to tax credit reductions that took place at the beginning of the year, logistical issues, and the belief that ‘people don’t buy cars in the winter’.

On the surface, the company seems to have put past criticism of diminishing demand after the Q1 drop of this year with orders exceeding deliveries. Few can forget the profitable Q4 results of last year and a then-record delivery of 90,700 vehicles, and hence the question remains whether the company can generate a profit with Q4’s production figures beaten. Higher delivery may aid revenue, however, there are a few significant items to take into account considering the impressive delivery numbers.

On the demand side, there are three main factors to consider:

  1. The launch of the cheaper Model 3 overseas
  2. The availability of the base model that’s priced at $35,000 instead of the previous higher end (and priced) $60,000 Model 3 version
  3. A reduction in Model S sedan and Model X sport utility vehicle (SUV) figures that at 17,650 exceed last quarter’s disappointing 12,100 but are still below Q4’s 22,300 as the Model 3 takes a bigger slice of overall Tesla models sold

In terms of profitability then, it’s been hit on multiple fronts:

  1. Selling fewer Model S and Model X where profit margins are highest
  2. Losing out on profit margins from the higher priced Model 3 with the base model being introduced
  3. Making the autopilot driver-assist feature standard on all its models, a previous $3000 premium charge

So, a rise in deliveries in this case is set to necessitate a fall in profit (as well as possibly revenue) figures from its automotive sector, as margins get squeezed. With that in mind, let’s look at the estimates ahead of the release.

Tesla’s results preview: what does Wall Street expect?

As far as wide-ranging estimates go, Tesla hardly ever disappoints. And it’s no exception this time around as the estimates continue to vary significantly for the automotive and energy company’s target. The average earnings estimate per share for Q2 is -0.52, well below the -2.9 suffered in Q1 but also nowhere near the positive figures of last year’s Q3 and Q4 releases. Revenue estimates are $6.39 billion, a near 60% sales growth on last year’s $4 billion.

How to trade Tesla’s Q2 results

Analysts are significantly mixed as usual, with the bias heavy on both buy and sell sides and the net balancing out to roughly a hold in the middle, and with bank titans mostly holding a neutral to sell outlook. IG’s retail bias is showing a 66% heavy long bias, while on the exchange it remains one of the most heavily shorted stocks, with short interest rising to over 41 million as compared to December’s roughly 26 million, as more get comfortable shorting the stock anticipating further declines.

Tesla share price: technical analysis

On the chart below, thus far we’re seeing a bear trend channel that held for most of the year until it was broken following fundamental news of the record Q2 delivery figures. But confirmation will be needed with the upcoming release, and it remains to be seen whether the bulk of shorts initiated at these lower price levels makes them susceptible to a short squeeze.

Tesla investors remain hopeful on future technological progress

That’s not to say long investors aren’t hopeful about what the company’s future holds, due to potential growth in China with its factory expected to be operational before the end of the year, fully autonomous vehicles that despite difficulties could still be a short to mid-term reality, and tougher EU rules from 2020 regarding carbon dioxide (CO2) emissions that’ll carry heftier fines and benefit Tesla which could sell its credits at an even pricier rate. What isn’t likely to change however, are analysts and traders’ wide-ranged belief of where the stock price will shift towards.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.