Tesla Stock Price Prediction: Can Earnings Push TSLA to $406?

Tesla stock price prediction faces a key test ahead of the company’s Oct. 21 earnings release. Analysts expect weaker annual revenue and profits despite better-than-expected vehicle deliveries.

Tesla (TSLA) closed at $375.23 on Tuesday, Oct. 13, declining 0.74%, according to StockAnalysis. The shares remained below recent resistance near $386–$389 after several sessions of uneven trading.

Meanwhile, options traders positioned for volatility surrounding the earnings announcement. However, available derivatives data did not establish a clear bullish direction.

Tesla Stock Price Prediction Faces Q3 Earnings Test

TSLA stock will be in the spotlight as it releases its financial results on Wednesday next week. These numbers will provide more information about its business as its sales growth continues.

Analysts expect the upcoming results to show that its revenues dropped slightly in the second quarter from the same period last year. This decline will be because of the dynamics that the market experienced last year when the Trump administration ended the $7,500 EV tax credit.

Consumers rushed to buy Tesla’s vehicles at that time to take advantage of the credit. Even so, the most recent numbers showed that Tesla’s deliveries were modest in the third quarter. It delivered 486,532 vehicles, after making 464,391 in the quarter.

Tesla’s deliveries are benefiting from the ongoing US-Iran and Saudi Arabia-Houthi crisis that has pushed oil prices higher. Brent and the West Texas Intermediate (WTI) rose to $107 and $95, respectively.

As a result, the average gasoline and diesel prices have jumped to $4.34 and $6.27, respectively. This trend, together with the efficiency of Tesla vehicles, will likely drive more people to embrace EVs. This trend is already happening in the US and Europe,

The average estimate among analysts is that Tesla’s revenue dropped by 0.03% in the third quarter to $28 billion. The most optimistic analyst expects the company’s revenue to come in at $30.5 billion. This annual growth rate will likely be because of the higher vehicle prices and its energy business.

AI Investments and Free Cash Flow in Focus

The main catalyst for the stock will be its spending plans. In the last quarterly release, the company said that its free cash flow turned negative during the quarter as it continued to boost its AI investments. Precisely, most of its free cash flow is going towards Terafab, its giant project in Texas.

The options market suggests that the Tesla stock will jump after releasing its earnings. Based on volume, options expiring next week on Friday have a put/call ratio of 0.44. On the other hand, based on its open interest, the ratio stands at 0.36. These numbers mean that the company has more calls than puts.

Digging deeper into the options chain, we see that most of the calls are concentrated at $380 followed by $390. At the upper side, the upside potential is about 4.4% from the current level. On the other hand, most of the puts are concentrated at $375, where it is today. Many analysts are bullish on Tesla stock, with the average target among 46 of them being $412.

Tesla Stock Price Technical Analysis

The daily chart shows that the TSLA stock has wavered in the past few days. It is trading at $375, a few points below the important resistance level of $386, its highest point on September 3 and 24.

The stock has remained above the Major S/R pivot point of the Murrey Math Lines tool. It has also jumped above the 50-day Exponential Moving Average (EMA), which is a bullish sign.

Therefore, the stock will likely have a strong bullish breakout once the ongoing compression phase ends. If this happens, it may jump to $406, the Strong, Pivot, Reverse level of the Murrey Math Lines tool.

This article is for informational purposes only and does not constitute financial or investment advice.