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Tesla, Inc. (TSLA) reports earnings after Wednesday’s closing bell, and analysts are looking for a loss of $ 0.28 per share in second-quarter 2020 revenue of $ 5.31 billion. The electric vehicle (EV) maker lost ground despite reporting a first-quarter windfall in April, but recovered quickly, entering a wave of historic momentum that hit a record high of $ 1,795 on July 13. Tesla stocks are now consolidating those impressive gains, trading at around 150 points below the high peak.
To carry key
- Tesla shares are trading near a record high before earnings release on Wednesday.
- Speculators are looking for the electric vehicle maker to report record deliveries in the second quarter.
- A profit deficit could trigger a major decline because the stock price is perfect.
Earnings expectations are extremely high, with recent rumors insisting that Elon Musk and the company will report record deliveries in the second quarter, the primary metric it uses to measure growth due to high debt levels and a long series of quarters. losers, who were finally smashed by the first upside surprise of the quarter. This makes valuation extremely difficult, as it requires forensic analysts to review Tesla’s SEC filings to measure their actual growth curve.
Analysts also struggle to measure Tesla’s intrinsic value because car manufacturing has a long-standing reputation as a highly cyclical industry, with consumer sales increasing during periods of economic expansion and declining during recessions and recessions. Traditional manufacturers have been sounding the alarm in this regard, reporting that sales fell, forcing them to shut down factories and lay off workers.
Tesla’s stock price is perfect for this week’s confessional, increasing the odds of a reaction to sell the news if high expectations are not met. However, the most popular names in the market have been engulfed in a wave of momentum since the March sales climax, while thousands of new operators have used government stimulus checks to open commission-free accounts. It is inadvisable to underestimate this pocket of liquidity, which is perfectly capable of raising Tesla shares above $ 2,000.
What is valuation? Valuation is the analytical process of determining the current (or projected) value of an asset or a company. There are many techniques used to make an assessment. An analyst who assigns a value to a company analyzes the management of the business, the composition of its capital structure, the prospect of future earnings and the market value of its assets, among other metrics.
Tesla weekly chart (2017 – 2020)
A multi-year bullish trend broke just under $ 400 in the second quarter of 2017 and narrowed to a trading range, with support below $ 250. The stock broke the support range in May 2019 and entered a sharp decline that ended in a two-year low in June. That downdraft completed a selling climax, giving way to a powerful breakthrough that reassembled the broken support in the fourth quarter. The steady rise reached range resistance in December, generating an immediate breakout that drew significant momentum buying interest.
Strong short coverage fueled the first wave of the rally, adding nearly 600 points in seven weeks before stagnating just below $ 1,000 in February 2020. A failed breakout attempt completed a small double top at the end of the month, with an immediate breakout that left 100% rally profit before reverting to $ 350 in mid-March. Subsequent buy momentum completed an Elliott five-wave advance to $ 870 on May 1 and turned into a triangular consolidation that produced a breakout in early June.
The all-time bullish trend culminated in a six-day rally wave that added nearly 1,000 points to the all-time high of July 14 at $ 1,795. The stock reversed in that session and settled around the $ 1,500 level for a week before rising sharply on Monday, adding 142 points. Tuesday morning is trading slightly lower, but speculators could return at any time, which would push stocks to their previous high before earnings release.
What is Elliott Wave Theory? Elliott Wave Theory was developed by Ralph Nelson Elliott to describe price movements in financial markets, in which he observed and identified recurring patterns of fractal waves. The waves can be identified in the movements of the stock price and in consumer behavior. Investors trying to profit from a market trend could be described as “a wave”.
The bottom line
Tesla shares return to recovery mode ahead of the post-Wednesday market earnings report, with speculation that the electric vehicle maker will report record second-quarter deliveries. It is currently priced perfectly, so a deficit or other less-than-spectacular news could trigger a high-percentage decline that breaks through the $ 1,500 level.
Disclosure: The author had no positions in the aforementioned securities at the time of publication.
