Tesla Ready to Kick Off Tech-Packed Earnings Week

The equity could benefit from a shift in analyst sentiment

Digital Content Manager
Jul 26, 2021 at 1:05 PM
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All eyes will be on the tech sector this week, as several big names step into the earnings confessional. Among the first to report is Tesla Inc (NASDAQ:TSLA), which is expected to released its second-quarter results after the close today. The electric vehicle concern was last seen up 2.5% at $659.56 as anticipation builds ahead of the event. Below, we will take a deeper dive into how the security has performed on the charts of late, and explore some of its past post-earnings activity. 

Tesla stock has taken a major step back from its Jan. 25, all-time high of $900.40. The shares have pulled back to the $540 area twice since that peak, and have been trading mostly sideways over the past month. And while the security sports a 134.1% year-over-year lead, the 120-day moving average has pressured shares lower since early May.

TSLA 120 Day

Options traders are pricing in a 9.3% post-earnings swing for TSLA this time around, which is slightly larger than the 7.2% move the stock averaged after its last eight reports, regardless of direction. The security has enjoyed positive next-day returns after half of these reports, including a 17.7% pop in October 2019.

The brokerage bunch is mostly pessimistic towards Tesla stock, indicating there is room for upgrades, should the company deliver upbeat results. Of the 22 analysts in question, 12 carry a tepid "hold' or worse rating, while 10 say "buy" or better. Meanwhile, the 12-month consensus target price of $686.94 is a slim 3.6% premium to current levels.

Now seems like a great opportunity to speculate on TSLA's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 50% stands in the 6th percentile of readings from the past year, indicating options players are pricing in low volatility expectations at the moment. Plus, the stock's Schaeffer's Volatility Scorecard (SVS) sits at a high 97 out of 100, indicating it has exceeded options traders' volatility expectations in the past year -- a boon for buyers.

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