Ought to You Purchase Tesla ETFs Forward of Q3 Earnings?

Electrical carmaker Tesla Motors TSLA is scheduled to report outcomes for the third quarter of 2024 on Oct. 23, after market shut.

Tesla has misplaced 13% over the previous three months in contrast with the trade’s decline of 14.8%. Notably, Tesla’s Robotaxi occasion didn’t impress traders, pushing Tesla’s shares down about 9% since Oct. 10. The weak development would possibly reverse if Tesla comes up with an earnings beat. The electrical carmaker noticed favorable earnings estimate revision for the to-be-reported quarter, which is mostly a precursor to an earnings beat (learn: Time for Uber-Lyft ETFs After Tesla’s Unimpressive Robotaxi Event?).

Picture Supply: Zacks Funding Analysis

ETFs having a considerable allocation to this luxurious carmaker like Direxion Each day TSLA Bull 2X Shares TSLL, ARK Innovation ETF ARKK, Shopper Discretionary Choose Sector SPDR Fund XLY, Simplify Volt Robocar Disruption and Tech ETF VCAR and ARK Autonomous Know-how & Robotics ETF ARKQ are in focus forward of the corporate’s third-quarter earnings.

Earnings Whispers

Tesla has an Earnings ESP of -1.28% and a Zacks Rank #2 (Purchase). Based on our methodology, the mix of a optimistic Earnings ESP and a Zacks Rank #1 (Robust Purchase), 2 or 3 (Maintain) will increase the probabilities of an earnings beat. You possibly can uncover one of the best shares to purchase or promote earlier than they’re reported with our Earnings ESP Filter.

The electrical carmaker noticed a optimistic earnings estimate revision of a penny over the previous seven days for the to-be-reported quarter. Analysts rising estimates proper earlier than earnings — with probably the most up-to-date data potential — is an effective indicator for the inventory. The Zacks Consensus Estimate for third-quarter earnings signifies a considerable year-over-year decline of 12.1% and income development of 9.5%. The earnings monitor document of the corporate will not be good because it delivered a four-quarter common destructive earnings shock of seven.99%.

Discover the newest EPS estimates and surprises on Zacks Earnings Calendar.

Tesla, Inc. Worth, Consensus and EPS Shock

Tesla, Inc. price-consensus-eps-surprise-chart | Tesla, Inc. Quote

Robust Q3 Deliveries

Earlier this month, Tesla returned to supply development within the third quarter after two consecutive quarters of decline and reported the third-largest quarterly quantity within the firm’s historical past (learn: Tesla Returns to Delivery Growth but Shares Slip: ETFs in Focus).

This main electrical carmaker delivered 462,890 (439,975 Mannequin 3/Y and 22,915 different fashions) vehicles worldwide within the third quarter, up 6.4% yr over. This marks the primary quarter of year-over-year development in 2024 and the third-largest quarterly quantity within the firm’s historical past. Nonetheless, supply numbers fell in need of the estimated 463,310, in line with FactSet StreetAccount knowledge. Tesla produced 469,796 (443,668 Mannequin 3/Y and 26,128 different fashions) automobiles throughout the quarter.

The return to development reveals that among the incentives that Tesla had rolled out to spice up demand are actually paying off.

What to Watch

Traders are keenly ready for specifics on the corporate’s plans for an inexpensive EV beneath $30,000 and its long-term Cybercab imaginative and prescient after the current Robotaxi occasion, which left traders disenchanted as a result of lack of concrete particulars concerning its ridesharing platform.

On Oct. 10, Tesla CEO Elon Musk unveiled long-anticipated prototypes of the Cybercab, the corporate’s new robotaxi. The upcoming self-driving Cybercab can be accessible for underneath $30,000, with manufacturing anticipated to start in 2026. Tesla additionally revealed a Robovan idea, a bigger autonomous automobile able to transporting as much as 20 individuals at a time. Each the Cybercab and Robovan sign Tesla’s efforts to develop into the autonomous transportation market, with the Cybercab positioned as a extra inexpensive choice for customers trying to make use of or hire out self-driving automobiles by means of the Tesla community.

Tesla’s technique is to depend on its camera-based Full Self-Driving (FSD) system, which is significantly totally different from opponents like Waymo that use costly lidar and radar know-how. The carmaker is on monitor to start manufacturing of latest, inexpensive EV fashions in early 2025. The brand new and extra inexpensive fashions can be constructed on Tesla’s next-generation platform and can be produced on the identical manufacturing websites as Tesla’s present choices.

ETFs in Focus

Direxion Each day TSLA Bull 2X Shares (TSLL)

With AUM of $2.1 billion, Direxion Each day TSLA Bull 2X Shares is by far the biggest U.S.-listed single-stock ETF available on the market. It affords 2 occasions (200%) the each day share change of the widespread inventory of Tesla, charging 86 bps in annual charges.

ARK Innovation ETF (ARKK)

ARK Innovation ETF is an actively managed fund that invests in corporations that profit from the event of latest services or products, technological enhancements and developments in scientific analysis associated to the areas of DNA Applied sciences and Genomic Revolution, Automation, Robotics, Power Storage, Synthetic Intelligence, Subsequent Era Web and Fintech Innovation. The fund holds 34 securities in its basket, with Tesla occupying the highest spot at 13%. ARK Innovation ETF has gathered $5.6 billion in its asset base and costs 75 bps in charges per yr from traders.

Shopper Discretionary Choose Sector SPDR Fund (XLY)

Shopper Discretionary Choose Sector SPDR Fund affords publicity to the broad shopper discretionary house by monitoring the Shopper Discretionary Choose Sector Index. Holding 50 securities in its basket, Tesla takes the second spot with 12.5% of the belongings. Shopper Discretionary Choose Sector SPDR Fund is the biggest and hottest product on this house, with AUM of $19.8 billion and costs 9 bps in annual charges. It has a Zacks ETF Rank #2 with a Medium threat outlook.

Simplify Volt Robocar Disruption and Tech ETF (VCAR)

Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF searching for concentrated publicity to the chief of autonomous driving know-how. It employs a name choice overlay to hunt boosts in efficiency throughout excessive strikes up in Tesla whereas holding a tech index for diversification and put choices as a hedge. Simplify Volt Robocar Disruption and Tech ETF costs traders 0.95% in annual charges. It has accrued $5.2 million in its asset base (learn: 5 Tech ETFs at the Forefront of the Fed-Induced Rally).

ARK Autonomous Know-how & Robotics ETF (ARKQ)

ARK Autonomous Know-how & Robotics ETF is an actively managed ETF searching for long-term capital appreciation by investing in corporations that profit from the event of services or products and technological enchancment and developments in scientific analysis associated to power, automation and manufacturing, supplies, and transportation. This method leads to a basket of 37 shares, with Tesla occupying the highest spot with an 11.9% share. ARK Autonomous Know-how & Robotics ETF has accrued $785.3 million in its asset base and costs 75 bps in charges per yr.