Hypothetical Stock Picks: Tesla Reports Earnings Wednesday After Close

Tesla is announcing earnings Wednesday after the market closes. Currently, it is down a bit after its 13% jump following the announcement of their new electric vehicle.

The bottom line for me is that they have sold almost a half-million of this new car since then and they have not even started production yet. Each of those people paid $1k to reserve their Tesla, meaning they were handed a half-billion dollars in cash by people who intend to buy a Tesla once they come out.

I think the earnings report will be very good. If it starts low for its recent range on Monday, I would say this is a very good time to buy and hold until a day or two after the earnings report.

Let’s see how it goes!


Update 2016-05-02:

On the first of last month, I bet Tesla would go up 5% after the Model 3 unveil. It ended up going up from $237 to $265, 11.8%!

It is now back down to $238.

We know several key things about their earnings announcement Wednesday;

  • Tesla sold over 400,000 preorders of the Model 3 at $1,000 each, effectively handing them $400m in cash for cars that have not even started production yet.
  • Sales of existing vehicles are up over 50% from last year.

It’s going to be an exciting Wednesday for Tesla. I would probably wait until we get closer to Wednesday to buy, as the stock is trending down for the last few days.


Update 2016-05-04:

Yesterday, Tesla confirmed rumors of higher battery size options wich increase the price of some of their existing models. This morning, the stock is trading at $228, at the bottom of its 5-day range.

I would buy now if I was ready to start trading for real, and set a goal of +5%/-2.5%, but not sell until tomorrow, after the earnings report comes out.

Let’s see how it goes!


Update 2016-05-04:

At around 10am this morning, this trade would have hit the stop-loss and sold down 2.5%. Unfortunately, though the news was all good and all better than expectations, the majority of analysis seemed to report that the stock was over-valued.

One report said that Tesla was valued at over $600k per car sold that year, where GM is valued at under $4k per car sold last year, and that this means Tesla is over-valued despite the obvious and dramatic long-term differences between the two companies.

Even though the long-term prospects had greatly increased and the short-term prospects had beaten expectations, the market decided the stock was over-valued.

I still think that when this correction ends, it will be a good time to buy long.

This is my first loss during this learning journey. I will play it safer on the next trade!