Will Tesla shares falter after results if history repeats itself before rising later this year? Or will WILDCARDS send its shares higher, supported by FSD bulls buying

Jessica Amir joined discussion · Apr 23, 2024 10:22

Whatever happens tonight with Tesla $Tesla (TSLA.US)$ it's going to be wild because Tesla is the third most searched item on Bloomberg and Tesla Short Interest rose to its the highest since 2021.

Read below for more also watch my video on the Tesla scenarios.

- Market consensus sees EPS Adj' -39% YoY to 0.526.

- That's on expectations Q1 EBIT -40% YoY to $1.61B. Which would be its smallest earnings since 2021. And that's been shaved -19.5% in 4 weeks. Concern is EBIT falls further

- Market consensus sees Revenue -4.4% YoY to $22.305B. That's been shaved -9% in 4 weeks. Concern is, revenue falls further.

- The last four quarters have been disappointing with earnings falling further than expected and $TSLA shares have fallen 9.3%-12% 1-day after results. So if TSLA shares drop 9-10% after results, if history repeats itself, Robotaxi and FSD bulls will probably buy the dip, believing in its capabilities, which could drive TSLA shares higher sooner than the market expects.

- Also consider Tesla $Tesla (TSLA.US)$ shares could also be due for a bounce as TSLA shares are oversold. The last 5 times TSLA was this oversold it staged a 38% rally on average.

- Also consider Bloomberg values Tesla's AI-driven Full Self-Driving (FSD) business at $117 a share alone (today) and sees FSD accounting for 31% of revenue by 2040. Tesla's Robotaxi is expected to launch in Aug. And 'It could remold Tesla' (Bloomberg)

- The other wildcard is if @elonmusk confirms Tesla is pushing ahead with the launch of its affordable Model 2 at ~US$25k. This will intensify car maker competition. It seems speculation is swirling Musk won't be pushing ahead with this and instead pivoted to the Robotaxi instead. THIS IS SPECULATION. If Musk launches the cheaper EV, it would probably claim back market share in China (especially as Tesla now has 0% car finance in China). The cheaper Tesla EV, would also be one of Australia's cheapest and rival Chery. Also, if Musk announces the cheaper EVs will go shorts will likely need to be closed, and stock will likely be ‘bought’ and this, will also support Tesla’s $Tesla (TSLA.US)$ technical bounce up as well.

-All in all, as it stand now you would think dip buyers will swoop in and buy into $Tesla (TSLA.US)$ share price weakness as Market consensus sees EPS growth turning positive in Q3 this year. And yearly EPS growth returning next year of 33%, with a huge shoot-the-lights-out jump in Q1 2025 EPS of 64%. This is based on consensus.

- As I wrote yesterday, this is why I think Tesla shares may not start to recover until later this year, or early next year.Also note, Tesla options suggest its shares won't get back to $200 until July now, instead of May.

- But Consensus sees Tesla shares 8% higher in 1 year.