Tesla Stock Forecast Ahead of Earnings This Week: Buy or Sell?

Tesla stock will be in the spotlight this week as investors digest several important developments, including its second-quarter earnings report, its German expansion, and the new US-Iran war. TSLA was trading at $380, an important support level.

Tesla Stock in Focus Ahead of Earnings

TSLA stock will be in focus this week as the company publishes its second-quarter earnings, which are expected to show that it made steady progress.

The most recent vehicle delivery numbers showed that the company sold over 480k vehicles in the second quarter. This was a big milestone as the company made 450k vehicles in this quarter. Its Q1 deliveries were also lower than what analysts were expecting.

Yahoo Finance data shows that analysts expect Tesla to post another quarter of strong revenue growth. The consensus estimate is that second-quarter revenue rose 17.2% year over year to $26.36 billion, with the highest forecast reaching $29 billion. Historically, Tesla has consistently reported revenue that exceeds analysts’ estimates.

Tesla’s earnings per share is expected to come in at 54 cents, higher than the 40 cents it made in the second quarter of last year. Still, the main challenge has been its free cash flow, which waned because of its Terafab investment.

Together with SpaceX, the companies are spending billions of dollars in this operation. Tesla has warned that it will have a negative free cash flow this year.

German Production Expansion

Tesla stock price will also be in the spotlight after reports that the company was planning to expand production in its German plant. It is doing that after experiencing elevated demand from the European market.

This growth is notable as it is coming at a time when Chinese companies are doing well in Europe. Recent data shows that Chinese exports to Europe have soared, with BYD having a big market share.

A good example of this is Xpeng, which has said that it was close to launching a “Model Y” competitor. It recently launched a similar, but cheaper vehicle, and launched it simultaneously in China and Europe.

There is a likelihood that Tesla’s demand will continue rising now that the US and Iran have resumed their fighting. Brent and West Texas Intermediate (WTI) have continued soaring, with the former hitting the key resistance at $90 for the first time in over a month.

US gasoline prices have moved back to $4 a gallon, according to AAA. This surge will continue in the coming days if the US-Iran war persists. As a result, more customers are likely to switch from Internal Combustion Engine (ICE) vehicles to EVs.

The biggest concern that Tesla stock faces is its hefty valuation. Data shows that the forward price-to-earnings ratio remains at 178, much higher than the S&P 500 Index’s average of 20. It is also much higher than other automakers like General Motors, Ford, and Stellantis.

TSLA Stock Price Technical Analysis

Technicals suggest that the Tesla share price may rebound after publishing its earnings this week. It has found substantial support along the ascending trendline that links the lowest levels since April this year. The stock has always rebounded whenever it retested this support.

Tesla has also formed a descending channel, which is part of the bullish flag pattern. A bullish flag is one of the most common continuation patterns in technical analysis.

Therefore, the most likely TSLA stock price forecast is bullish as long as it remains above the ascending trendline. If this happens, it may rebound to the upper side of the flag at $420. A move above that level will signal further gains, potentially to the all-time high of $498.