Earnings Preview: Tesla in focus

One of the most striking things about Tesla Inc. shares is the fact that they have appreciated over 400% since the start of the year! Such mouth-watering gains have made it the best performer on the Nasdaq in 2020 and golden child of the automaker industry.

This is incredible stuff, especially when considering how the coronavirus pandemic has severely punished the majority of stocks across the globe. Although the phenomenal rally witnessed over the past few months make Tesla one of the star performers in 2020, the upside has lost momentum recently with shares on their longest losing streak since mid-March. Stocks tumbles as much as 2.4% on Tuesday, bringing losses to losses to as much as 8.3% over the past four days - the biggest fall over such a period since September 25.

All eyes will be on Tesla’s latest earnings report which is scheduled to be released after US markets close on Wednesday. Wall Street is expecting earnings of $0.56 a share, up from the $0.37 seen in the same period last year. Revenue is pegged at $8.26bn, a hefty 31% increase on last year's $6.3bn. If the company is able to dish out an upside surprise, this could inject Tesla bulls with enough inspiration to elevate prices back to all-time highs.

Digger deeper, Tesla already offered an appetizer over what to expect for its earning after revealing that it produced 139,000 cars during the third quarter of 2020. This was over 50% more than Q2 thanks to a jump in demand for the Model 3 and new Model Y. While such a performance would be a welcome development for stocks, investors are more concerned whether Tesla will be able to deliver 500,000 vehicles this year.

The million dollar question is whether Tesla can deliver 500,000 cars in 2020. 318,777 cars have already been created during the first three quarters of 2020. This means that Tesla needs to sell at least 181,223 cars during the final quarter of 2020 to achieve this ambitious target. Whatever the outcome of the pending earnings report, it will certainly have an impact on Tesla stocks.

Talking technicals, prices have been under pressure on the past few weeks after investors reversed from Tesla stocks following Elon’s Musk’s flat Battery Day. A sense of anticipation is mounting ahead of the earnings report. Will Tesla bulls be instilled with enough inspiration to send prices back towards $500 or will a disappointing report bring bears back into the picture? Time will tell.