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(ticker: TSLA) stock underwent another gloomy day after earnings. Investors are well aware that this may occur. Tomorrow is expected to be an improvement.
Shares plummeted for the third successive time after the electric-vehicle maker disclosed quarterly numbers. Shares fell by 9.7% after the company announced first-quarter 2023 earnings. Amazingly, shares tumbled by the same percentage after it reported second-quarter figures. Shares dropped by 9.3%, concluding at $220.11, after the auto maker unveiled unsatisfactory third-quarter results on Wednesday.
The S&P 500
and Nasdaq Composite
declined by 0.9% and 1%, respectively.
The predicament was essentially the result of reduced profit margins and pricing. Decreased prices led to operating profit margins dropping below 8%, a decline of nearly 10 percentage points compared to the previous year. Tesla CEO Elon Musk did not express optimism during the company’s conference call, as he discussed how high interest rates were negatively impacting demand and the uncertain economic climate.
Historical data indicates that Tesla may experience a slight rebound at this point. Typically, shares have increased on average by 0.4% the day following a post-earnings decline and have risen on seven occasions. Additionally, one week after a significant decline, shares have typically increased by an average of 1.4%, effectively adding another percentage point to the rebound from Day One.
CappThesis founder and market technician Frank Cappelleri informs Barron’s that there are several crucial levels for investors to monitor. Tesla stock initially began the year at approximately $123 per share and reached a peak of over $290. At $222, it has declined by 38%, a level that technical traders pay close attention to. When a stock experiences such a significant drop, traders consider it as a buying opportunity.
Two other significant levels are $217, which corresponds to the stock’s highs in February and June, and $214, the 200-day moving average. Falling below $214 would indicate further trouble for investors.
He is not making a fundamental assessment of the stock. Instead, he is examining the stock charts to identify levels at which investors have previously stepped in to buy.
Tesla investors are familiar with the volatility surrounding earnings reports. On average, Tesla stock moves about 7% in either direction after an earnings report. In comparison, the average move for Apple
(AAPL) shares is about 4%.
Following earnings, Tesla stock drops around 58% of the time. On the other hand, Apple shares rise approximately 58% of the time after earnings.
In the past 41 quarters, Tesla has missed earnings estimates on 13 occasions. Apple has missed earnings three times.
Tesla is a unique stock.
Contact Al Root at [email protected]
Source : barrons.com