Tesla Stock Keeps Its Cool Ahead of Upcoming Earnings

Elon Musk drums up so much attention for his cryptocurrency portfolio that Tesla seems to take a backseat. In less than a week, however, Tesla will be thrust back into the spotlight when the electric vehicle maker reports its Q2 earnings on July 26. The stock is up by more than 1% today. After a white-hot stretch that started last year, TSLA shares are off their best levels of 2021.

More often than not, investors tend to be bullish on Tesla’s stock in the days before its quarterly earnings release. Barron’s pointed out that the average increase in the trading sessions leading up to earnings is 1.6%.

Software vs. Hardware

Morgan Stanley analysts reportedly suggest that Tesla’s revenue model could shift to where the company generates more sales from software vs. hardware, such as its Model 3s, for instance. The analysts address a shift in Wall Street coverage away from the traditional auto sector to more of a tech stock, which could warrant a rerating of the stock.

Tesla sells various software packages including a recently introduced Full Self Driving monthly subscription for USD 199 rather than a USD 10K lump sum. In turn, Tesla collects ongoing revenue and could attract more drivers with the added payment options. Tesla reminded drivers that the software won’t make the vehicle drive itself and they still must stay “fully attentive” and keep their “hands on the wheel.”

Performance Snapshot

Tesla already provided a snapshot into its Q2 performance with some stats, including the delivery of more than 200K vehicles across Model S/X and Model 3/Y despite supply chain constraints. The more vehicles that Tesla delivers, the more bullish the outlook for the stock as this means fewer cars sitting in inventory and more of them on the open road.

In addition, some performance results out of China are available thanks to China Automotive Information Net data cited by Bloomberg. Tesla saw close to a 30% spike in the number of registrations last month to more than 28,500 for the following vehicles that were built at its Shanghai site:

• Model 3 sedans
• Model Y SUVs

Meanwhile, Model 3 registrations came close to 17K and registrations for Model Y vehicles dipped vs. May levels. Last year, Tesla generated USD 6.6 billion in sales from China, representing about 20% of its overall revenue.