Tesla Stock Plummets After Earnings Whiff, Interest Rate Warning

TSLA is on track for its worst day since July 20

Digital Content Manager
Oct 19, 2023 at 10:54 AM
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Tesla Inc (NASDAQ:TSLA) is down 6.9% at $225.92 at last check, one of the worst stocks on the Nasdaq this morning. The electric vehicle (EV) maker reported adjusted third-quarter profits of 66 cents per share, lower than the forecasted mean of 73 cents per share. Revenue also missed its mark, while embattled CEO Elon Musk warned of the impact higher interest rates could have on demand despite lower prices. He also expressed concern over production of its Cybertruck, with deliveries set to begin on Nov. 30.

In response, no fewer than 10 analysts slashed their price targets, the sharpest coming from Truist Securities to $226 from $243. Overall, the brokerage bunch is hesitant toward TSLA, with 17 of the 26 in coverage sporting a "hold" or worse rating.

Options traders are also chiming in this morning, with 574,000 calls and 524,000 puts exchanged so far, or double the intraday average volume. Most popular is the October 220 put, where new positions are being bought to open.

As the leader of the EV industry, its no surprise that this earnings report has rocked the sector, with peers Rivian Automotive (RIVN), Lucid Group (LCID), Fisker (FSR) and Nikola (NKLA) all sharply lower today. Tesla stock itself is trading at its lowest level since August, slipping below long-term support from its 120-day moving average, which has contained pullbacks since late May.

The shares are on track for their worst single-day percentage drop since July 20, though still boast an 83.3% lead for 2023. Keep an eye on the equity's 160-day moving average, which is getting tested during today's selloff. 

While calls still outpace puts on an overall basis, the latter are growing in popularity. Tesla stock's 50-day put/call volume ratio of 0.86 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 84% of annual readings. This means puts have been getting picked up at a quicker-than-usual clip.

It's also worth noting that the equity's Schaeffer's Volatility Scorecard (SVS) ranks at an elevated 95 out of 100, suggesting it exceeded option traders' volatility expectations during the past year. 

 

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