New York, Sep 09, 2022 (News Direct via Comtex) -- --News Direct--
Trading Tesla, Inc. /zigman2/quotes/203558040/lastsale TSLA -3.55% is arguably always an adventure. The stock remains highly volatile, with a beta* of 2.11, making it twice as responsive as the overall market.
Tesla sits at the apex of a rising electric vehicle (EV) industry and is now facing stiffening competition from up-and-coming companies like Rivian Automotive Inc. /zigman2/quotes/230726939/composite RIVN -0.57% and Polestar /zigman2/quotes/226726488/composite PSNYW -0.82% , established traditional car manufacturers like Ford Motor Co. /zigman2/quotes/208911460/composite F 0.00% , General Motors Co. /zigman2/quotes/205226835/composite GM +0.19% , Honda Motor Co. /zigman2/quotes/207173990/composite HMC +0.46% and Toyota Motor Corp. /zigman2/quotes/200537742/composite TM +0.35% , as well as overseas rivals like NIO Inc. /zigman2/quotes/204905836/composite NIO -6.21% and Xpeng Inc. /zigman2/quotes/219982686/composite XPEV -8.85% .
Tesla's ascension to the top of numerous leading stock market indexes, like the NASDAQ 100, has put it squarely in the targets of both retail and institutional investors. It remains one of the most heavily traded — and shorted— stocks on U.S. exchanges, with strong options volume.
Elon Musk, Tesla’s eccentric CEO, remains capable of whipping retail investors into a frenzy with memes, antics and high-profile feuds such as his current lawsuit with Twitter Inc. over a potential acquisition.
The bottom line is, for Bulls and Bears alike, ample trading opportunities could exist given the stock’s volatility and the attention it receives. The question is: What catalysts can Tesla traders look forward to for the remainder of 2022? And how can they best trade around them?
Trading volume and volatility for Tesla tend to surge around its quarterly earnings reports, with the most recent occurring on July 20 for the second quarter of 2022. Tesla is next expected to announce its third quarter earnings report between October 19 and 24.
As the date of the earnings report approaches, key figures to watch for and compare to consensus analyst estimates could include:
The continued impacts of inflation and supply chain constraints on gross margins for its automotive segment (its largest source of revenue) by comparing year-over-year quarterly growth/shrinkage.
Whether Tesla's new Gigafactory in Austin, Texas will exceed the forecasted 1,000-per-week vehicle production estimate set by management.
The growth rate of its infrastructure — in particular the potential increases in the number of stores, service centers and Supercharger locations.
The disposition of its remaining 25% holding of Bitcoin (crypto:BTC) after selling 75% at the end of the second quarter.
Tesla shareholders also approved a 3-for-1 forward stock split Thursday, August 4 based on a preliminary vote count. Previously in 2020, shares surged in the weeks after Tesla last effected a 5-for-1 stock split. Traders might be able to take advantage of heightened volatility in the upcoming weeks as investors snap up Tesla shares in anticipation of the split date.
As a growth stock, Tesla is likely to be affected by inflation and rising rates, which could depress its valuation and increase the cost of borrowing for capital. Key dates to watch for leading up to Tesla's October earnings report include:
The consumer price index (CPI)* figures for August and September will be released on September 13 and October 13, respectively1.
The Federal Open Market Committee (FOMC) meets on September 20-21. Chairman Jerome Powell has brought up the possibility of a third consecutive 75-basis point rate hike, with a target Fed Funds Rate of 3.25% to 3.5% by year end2.
Earlier in July, Musk lamented the effects of prolonged high inflation on Tesla's expenses and sales prices, noting that the two new factories in Austin, Texas and Brandenburg, Germany, were "gigantic money furnaces."
Elevated prices for raw materials and, in particular, semiconductors, were cited as a major impact on Tesla's reduced margins. Traders can therefore keep an eye on the producer price index by industry, with semiconductor and other electronic components manufacturing as a potential leading indicator for Tesla's outlook3.
Traders looking for amplified exposure to Tesla can use Direxion’s suite of Daily TSLA Bull 1.5X Shares (TSLL) and Daily TSLA Bear 1X Shares (TSLS) in lieu of margin or options.
TSLL seeks daily investment results, before fees and expenses, of 150% of the performance of TSLA for a single day, and TSLS seeks daily investment results, before fees and expenses, of 100% of the inverse of the performance of TSLA for a single day. It is important to note that the funds to not invest directly in TSLA. Traders with a bullish outlook can buy TSLL to go long if they think TSLA will go up. Conversely, traders with a bearish outlook can buy TSLS to go short if they think TSLA will tank.