Tesla share price: what to expect from Q2 results

It’s been a busy quarter for Tesla shares, its price shedding half of its value at the start of the second quarter (Q2), breaking below $400, before reversing to end the quarter above $1000.

And it’s only become busier since, with recent fresh record highs. In the process, it’s become the most valuable car company in the world by market share. Anticipation is rising that it’ll be included in the S&P 500 index, forcing exchange traded funds (ETFs) and index-tracking funds into buying it, provided it can manage a fourth consecutive profit earnings figure. (The committee that oversees the index may include it regardless but it would be an exceptional case should it fail to post a positive reading.)

When is Tesla’s results date?

There’s much confusion over whether to label it an electric vehicle company at a time when transportation demand is depressed and the auto sector is in pain, or a tech company as investors buoyed by central bank easing flock into the tech sector and tech-heavy indices like the NASDAQ.

That confusion is unlikely to subside, but its earnings will be released on Wednesday, 22 July after market close, and should offer more clarity to analysts whose estimates continue to vary significantly.

Tesla share price: forecasts from Q2 results

While a positive earnings per share figure would aid Tesla in its inclusion into the S&P 500 and make it at current market cap levels one of the index’s largest, current estimates are for a negative reading, and for revenue to drop on last year’s $6.35 billion.

Production and delivery figures released earlier this month showed deliveries of about 90,650 vehicles and easily beating estimates of 72,000 vehicles. In production only 6326 units of its higher priced (and higher profit margin) Model S and Model X vehicles were made, and in turn the bulk of the 82,272 vehicles produced were from the lower priced Model 3 and Model Y.

Trading Tesla’s Q2 results: technical overview and trading strategies

The technical overview for Tesla remains volatile (to say the least), with its main technical indicators flashing green and an average directional movement index (ADX) showing an ongoing propensity to trend.

Tempting as it may be to label it a bull trend, the increased volatility beyond its averages, the breakage of its key pivot points with ease, and the enticement of investors, traders both large and small, and predatory algorithms into Tesla shares means its technical overview is better labelled as volatile.

That means contrary to the classic buy vs. sell mentality in approaching a stock, strategies that conform to the current overview should it persist would be breakout strategies anticipating a break/breach of its key pivot points (to the upside or downside).

Secondly, there would be contrarian overview strategies that would give reversal strategies a chance to initiate should the level get breached significantly, initiating as prices retrace for the session but risk getting stopped out should volatility surge.

IG Client sentiment* and short interest for Tesla shares

While traders are holding heavy to extreme long bias in the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google/Alphabet), the bias amongst traders for Tesla has been majority short for most of this period, and hence haven’t been beneficiaries of the latest bullish moves in its share price like they have been with other tech shares some of which have been making fresh record highs.

The start of last week’s majority short 60% bias has shifted to the middle at the start of this week as fresh longs get enticed into initiating and stops get triggered, with a rare 50/50 bias.

It also hasn’t been a positive story for shorts on the exchange as around the same time last year over 41 million shares were short, that figure dwindling to under 14 million in the latest reading and no doubt squeezed heavily and sustaining big losses.

It represents around 9.5% of the total shares floated. Any further upside movement will continue to push and punish shorts into unwinding at a higher price, forcing them into paying any price to close their bleeding short positions.

Tesla Chart with IG client sentiment

^{*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as the start of this week for the outer circle. Inner circle sentiment is from the start of last week.}