Jul 18, 2023

Automaker Tesla releases its second-quarter earnings this week, and these are the levels to watch.

tesla chart

TSLA: Weekly Chart

The overhead resistance in Tesla is at $314, which would be the target for a bullish report, and traders would be able to play a continuation above. If the results are disappointing, then a pullback is possible due to the speculative run.

Tesla stock has rallied by 128% year-to-date after posting record deliveries in its fourth and first-quarter results.

The company also said this week that it had begun production of its long-awaited cybertruck. Rival automaker Ford looked to dampen the mood over that announcement by cutting $10,000 from the price of its own pickup truck, the F150 Lightning.

Despite the record deliveries, Tesla’s earnings may come under pressure. The company saw margins drop to 2020 levels in the first quarter as the price cut strategy took effect. The company will also have to bear the cost of further cuts that took place in Q2.

Analysts at Morningstar said the fair value price for Tesla is $215, which is well below the current $285. On the first-quarter call, management said costs of raw materials would decline over the quarter, which could help add some profit.

“Our fair value estimate for Tesla stock is $215 per share. In the near term, we forecast that Tesla will increase its annual total vehicle delivery volume to a little over 1.8 million in 2023, or roughly 37% versus 2022. However, because price cuts far exceed cost savings, we forecast automotive gross margin contraction in 2023 to 22% from the 29% achieved in 2022,” Morningstar said.

Last week also saw Elon Musk announce a new AI startup, and Tesla investors will be disappointed at yet another distraction for the billionaire entrepreneur.

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