Prediction to Earnings on TSLA (Closing gap slowly, then retest)

Updated

TSLA is being tossed aside as all attention goes to NVDA and semiconductors. TSLA has been experiencing slow growth relative to the S and P. These are my thoughts on TSLA price action up to earnings in mid April. This is a prediction that is longer in time frame compared to my usual predictions, so take with a massive grain of salt. I'll update as more information comes up near earnings.

We see a channel formed starting from the previous earnings. With it's current growth speed, I expect filling the gap early March to the $210 range. I believe attention will continue into semiconductors, and bring TSLA along with them to this point. Since we hit new ATHs with the S and P and NVDA recently, this seems like a good estimate as to when we will see a market correction. Momentum into the S and P seems that it will carry it for a few weeks. The TSLA options market seems to align with this, since we have P/C ratios between 0.5 through 0.75.
After this upward leg, I expect investors to brace for earnings in mid-late March, early April. With no new exciting news coming from the EV space, I think investors will expect a similar results to the previous earnings report. This is where we may begin seeing price action back towards previous lows, potentially retesting $185 to $190 prior to earnings.
Post earnings: It's easy to think we will have a similar result as the previous quarter, since we don't have news, but the EV sector is looking to slash jobs and cut costs. This may help TSLA keep a larger margin that may potentially be lost by Tesla car price cuts. With more information leading up to earnings we may be able to refine this.

As always, significant market news can change things to unpredictable places, so I'll be keeping an eye out and updating.

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Some news to keep an eye out for are China-Taiwan-Tesla relations. Recently, Lawmakers have urged Elon to activate Starshield for Taiwan, but such a move may be met with retaliation on Elon's Tesla in China. Something to keep an eye out for in news in case there are developments in which Elon has to become involved. (Source: Interesting Engineering)

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Stock price broke channel much earlier than I expected. We will see if investors come back in tomorrow. I'm looking for downside run down to earnings, but not entering until gap fill to pre-Q4 earnings. There is a chance this won't happen and investors are beginning to position for rough earnings in April.

Recent news:
China selling most EVs in world.
Concerns of BYD entering US Market.
Competitor Ford sees 10.5% y-o-y sales increase for Feb.
Tesla shipments fall in Feb as announcing cuts in China
-Yahoo Finance

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Entered a few put positions, eyeing the stock price reaction at it's previous low of $175 from early February.

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If it doesn't keep above the $175, I expect it will have a hard time finding another support.

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Legged out small % seeing potential bounce

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Out of my puts, going to see if TSLA bounces off $175 to gap up.

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Bought calls. Not getting the massive moves predicted at once, but it's looking like an interesting trading day.

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Sold the rest of my calls

Just going to watch for now until later today. Price broke $175, hitting $173.80. I think we are testing to the downside on the long run, but just going to sit aside for now.

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Added a small put position before market close, expiring out in May.

The stock price is currently below $175 AH, with my position, I am looking to see if we test a few levels: $165 and $150. Because Tesla tends to bounce before hitting new levels, I may add to the position over time.

Recent news:
Morgan Stanley cuts price target on weakening EV demand. -Yahoo Finance

$1 Billion in damages by "eco" terrorists in Germany, plant shut down. -Fortune

Wall Street Journal op-ed on EVs releasing more toxic emissions than gas powered cars. (Although study referenced is from 2022) -WSJ

Elon meets with Trump on China tariffs. From recent Q4 call, Elon states: “Frankly, I think if there are not trade barriers established, they will pretty much demolish most other companies in the world.” -Barrons

This dip happened 2 weeks sooner than I expected. Since it is this early, we may have significant moves up and downward. Next few weeks will be interesting.

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New channel forming up on the 15 min:

With the historically wild swings TSLA has taken, I wouldn't be surprised if it decides to gap up in the next week. I'll be sitting on the sidelines until I see breaking on the upside or downside, with confirmation candles.

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Should have legged in more on those puts that I mentioned earlier:

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We hit our level $165, looking to see if we hold. Otherwise looking for $160 and $150 in the next week. Going to start looking for an exit on my long-dated puts in the next week

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I'd hang onto my puts if we see a quick downtrend continuing through the next few weeks. The bottom of the long-term trend from this point is in the $90 range. (See idea: tradingview.com/chart/TSLA/vE2dBB24-Shaky-lon)

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TSLA is trading at levels not seen since May '23.

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A billionaire has death inside a Tesla. Per Business Insider headline: "Angela Chao's death reveals Tesla's long-standing reverse gear issues." Angela Chao was U.S. Senator Mitch McConnell's sister-in-law.

Per Huff Post story released yesterday, the investigation is still ongoing, so we don't know if it is due to Tesla issue or driver error.

An interesting thing about this story is that small news organizations have covered this a month ago, when the death occurred, but just recently we are seeing bigger news organizations cover it like Huff Post, BI, etc.

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Still holding, thinking of closing out put position within this week for possibility of the following announcements on earnings:

Chance of announcing a $5-10 B stock buy back. As of the end of Dec. 2023, Tesla held nearly an ATH of 30B cash on hand. Investors are worried with their 3 year bearish movement in TSLA investment, especially after Tesla cut labor force and executives selling nearly of stock in the last 3 months. A cash buy back may help boost their stock.

Additional news on full autopilot, moving resources to hit FSD. The stock had a nice rally when Elon announced on Twitter in Mar. 25th: 1 month free trial of FSD software for Tesla cars that have it enabled. That's a clear signal the market wants improvement on FSD, so we may have reaffirmation about FSD, closer goal deadlines.

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We hit major support at $150

Closing part of my position here, but going to keep a close eye. Will we rest on this support through earnings, or might investors disrespect it and turn it into resistance?

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Deviating below $150 a fair amount with a downward channel on the 5 minute today:

This may be driven due to world news
More TSLA layoff news
Recall on cyber trucks

Hanging on to remaining puts, watching if stock wants to try for $135.

Trade closed manually

Closed last of my put position at blue line:

Will probably regret making more money on Monday if it dips further, but too much risk involved over the weekend and with earnings on Tuesday. I'll be keeping a close eye on news through the weekend. Will be watching very closely through earnings, and will make entry decisions afterward.

Overall, I call the 3 month out analysis and trade a success. I appreciate any of you readers who have been following along since Feb 22nd.

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UPDATE: Earnings report out, earnings call in 30 minutes. Up about 7.8%

Earnings down 8.54%, Revenue down 4.14%. The stock jump of about +7% indicates performance was priced in, and overshot. Exiting put position at $146 was a safe exit.

Earnings call may bring additional news, I'm holding on for any major announcements or news.

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Additional news reported is: Tesla to 'accelerate' launch of cheaper cars.

Made a mention of robotaxi function.

It will be interesting to see how this will develop as they will cut their workforce by an additional 6000 employees in Texas and CA, this comes after last weeks announcement of more than 10% cut in global workforce. -Reuters

I am expecting the stock to continue channeling upward with it's momentum throughout the week. I am eyeing potential gap up too $165-170, meeting the channel it was trading in.

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You'd be up MASSIVELY if you bought in when I closed my put position around $145, or if you were hoping to hit the top of my channel $175:

While the stock appeared to begin to slow down towards $175, the stock blew past it this morning with recent news. China removed restrictions on FSD in Tesla cars after passing China data security requirements per CNBC. This was a massive concern for TSLA investors, but now is being seen as a potential market share grabber off it's biggest China competitor, BYD, ranking #2 in the EV market as of 2023.

Future analysis and updates will be done on a new idea (this marks the end of post earnings updates.) If you don't want to miss my future updates, make sure to follow.

valentine_j_

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