Tesla (ticker: TSLA) stock experienced yet another disappointing day following the release of its earnings report. This marks the third consecutive drop in the value of its shares. However, there is hope that tomorrow will bring better results.
After reporting its quarterly numbers for the first quarter of 2023, the electric-vehicle maker witnessed a significant decline of 9.7% in its stock price. Surprisingly, the same percentage drop occurred after the release of its second-quarter numbers as well. The third-quarter results further exacerbated the situation, causing shares to plummet by 9.3% and ultimately close at $220.11.
In comparison, the S&P 500 and Nasdaq Composite experienced a relatively smaller decline of 0.9% and 1%, respectively.
The primary issues contributing to this downfall were profit margins and pricing. Price cuts resulted in operating profit margins falling below 8%, reflecting a nearly 10-percentage-point decrease from the previous year. Additionally, Tesla CEO Elon Musk’s tone during the conference call did not inspire confidence, as he discussed the negative impact of high interest rates on demand amidst challenging economic conditions.
Despite this negative turn, historical data suggests that Tesla may experience a mild rebound in the coming days. Typically, shares have increased by an average of 0.4% on the day following an earnings drop, showing improvement in seven instances. Even more promising, one week after the significant decline, shares have historically risen by an average of 1.4%, effectively recovering an additional percentage point from the initial rebound on Day One.
Tesla Stock Levels to Watch
CappThesis founder and market technician Frank Cappelleri highlights key levels for investors to monitor in Tesla stock. Starting the year at $123 a share and peaking above $290, the stock has currently given up 38% to reach $222. This level is closely watched by technical traders, who typically see a significant drop as a buying opportunity.
Two other important levels to observe are $217, which aligns with the highs in both February and June, and $214, representing the 200-day moving average. Breaching the $214 mark would indicate further challenges for investors.
It’s important to note that Cappelleri’s analysis is focused on stock charts rather than fundamental factors. By identifying levels where investors previously stepped in to buy, he gains insight into potential future buying opportunities.
Tesla investors are accustomed to the stock’s volatility surrounding earnings reports. On average, Tesla stock sees a 7% move, either positive or negative, after an earnings announcement. In comparison, Apple (AAPL) shares typically have a 4% move.
Post-earnings, Tesla stock drops approximately 58% of the time, while Apple shares rise around 58% of the time.
Over the past 41 quarters, Tesla has missed earnings estimates 13 times, whereas Apple has missed three times.
Tesla’s unique nature sets it apart from other stocks.
