To The Moon

We’re on the cusp of a pivotal moment— $Tesla Motors(TSLA)$ earnings report for Q3 2024 is scheduled for October 23, 2024, after the market close. This quarterly earnings release comes at a time when Tesla’s stock has faced volatility, and expectations are mixed. Analysts are forecasting $0.46 EPS, but given Tesla’s historical unpredictability, it's worth asking: will Elon Musk steer the narrative towards optimism, or will this quarter disappoint?

I’ll walk you through my thoughts on how I am positioning ahead of this earnings release, what factors to watch, and where I think the stock could be headed next. Let’s dive in but please DYODD.

1. What the Market Expects: Consensus EPS and Revenue

The market anticipates $0.46 earnings per share (EPS) for Q3 2024, with a significant focus on whether Tesla can maintain profitability while scaling its operations. However, Tesla has a history of surprising investors—both positively and negatively. Remember when Tesla stock surged despite profitability concerns or dipped despite record deliveries? It’s not just the numbers that matter—it’s the narrative.

Lately, sentiment around Tesla has taken a hit after the robotaxi program missed expectations. Investors hoped this would mark a new era of autonomous mobility, but delays and underwhelming performance metrics have caused frustration. If there’s one thing Tesla bulls crave, it’s positive surprises—and that’s where Elon Musk’s ability to control sentiment becomes critical.

2. Elon Musk’s Impact: Will He Deliver Positive News?

Tesla’s earnings calls are unique because Elon Musk’s commentary can move the stock significantly. If Musk provides fresh updates—perhaps on Cybertruck production, 4680 battery scaling, or new developments with the long-promised robotaxi fleet—Tesla could catch a bid, even if the numbers themselves are lackluster.

At the same time, investors will be wary of Musk’s penchant for overpromising. If the earnings call lacks clarity or contains ambiguous timelines (as we’ve seen in the past), the market could punish the stock. Musk needs to balance optimism with credibility for Tesla to rebound.

3. Will the Stock Drop Below $200 or Rally to $250?

Let’s get into the technicals. Tesla is currently trading in a $200-$220 range, with critical support sitting near the $200 level. If earnings disappoint or if guidance is weak, it’s entirely possible we’ll see the stock fall below $200—a psychological level that, once broken, could trigger further selling from institutions and retail traders alike. On the flip side, if earnings exceed expectations or Musk drops a positive bombshell (like faster Cybertruck deliveries or margin improvements), we could see the stock rally toward $250.

Key Factors to Watch During the Earnings Call

1. Margins: How much is Tesla making on every car sold? Watch for commentary around margin compression, especially with price cuts impacting profits.

2. Cybertruck Progress: The market will want concrete details on the production timeline for Cybertruck, a key catalyst for future growth.

3. Robotaxi Updates: Any fresh news on the robotaxi initiative will heavily influence sentiment. The market needs reassurance that the program isn’t a lost cause.

4. Demand Trends in China and Europe: Global macroeconomic conditions are tough—Tesla’s demand in these markets will be a key focus.

4. My Trading Plan: Positioning for Tesla Earnings

Now, onto the burning question—how am I positioning?

In the lead-up to earnings, I’m taking a neutral-to-bearish stance with options, as the stock’s recent performance and the robotaxi miss make me cautious. Here's my game plan:

1. Options Play - Straddle or Strangle:

   I’ll buy a straddle (or strangle) on Tesla to profit from volatility. The market expects earnings to move the stock significantly in either direction, and these strategies allow me to capture that movement regardless of whether it’s bullish or bearish.

2. Protective Put Near $200:

   I’ll buy a protective put slightly below $200 as insurance in case earnings disappoint and Tesla breaks below support.

5. Final Thoughts: Bull or Bear?

Tesla remains a polarizing stock—you’re either a believer in the long-term vision or a skeptic questioning its sky-high valuation. Personally, I’m taking a cautious stance this earnings season. While Tesla has plenty of long-term catalysts (like the Cybertruck and energy business), the near-term uncertainties around margins, robotaxis, and production slowdowns make me wary.

If Musk delivers positive news and surprises the market, Tesla could rally hard toward $250. But if the report is lackluster, expect the stock to test and possibly fall below $200. With so much uncertainty, I believe the best way to trade this event is through options strategies—hedging against both upside and downside risks.

As always, trade with discipline and don’t let emotions drive your decisions. Tesla is a volatile stock, and post-earnings moves can be brutal for those unprepared. Position smartly, and remember that the long-term game is still open for those with patience.

Happy trading but please DYODD!

Disclosure: This post reflects my personal opinions and is not financial advice. Always conduct your own research before making investment decisions.