Should You Buy Tesla Stock Before Oct. 23? Here's What History Suggests
Tesla is set for a significant month with its third-quarter earnings report on Oct. 23, following its production stats and "We, Robot" event. Investors should focus on updates regarding lower-cost vehicles, Robotaxi, and robotics. Historical data shows Tesla stock is volatile around earnings, with mixed performance over the past years. Despite recent disappointments, macroeconomic improvements may benefit Tesla. Ultimately, timing the market is risky; long-term believers in Tesla's vision may consider buying regardless of earnings timing.
October is shaping up to be an eventful month for Tesla (TSLA -0.09%).
On Oct. 2, Tesla released its production and delivery stats for the third quarter -- standard procedure for the company prior to publishing its quarterly earnings. Just days later, it held its highly anticipated "We, Robot" event, during which it showed off the progress it has made on self-driving vehicles and humanoid robots.
And on Oct. 23, it will issue its third-quarter earnings report.
Let's explore some important themes that investors should be thinking about as Tesla's quarterly report approaches, and assess if now is a good time to buy the stock.
What's at stake in Tesla's upcoming report?
As a shareholder of Tesla, I'm going to be on the lookout for the following things in its third-quarter report:
1. Updates on the lower-cost vehicle model;
2. News surrounding the Robotaxi and autonomous driving in general;
3. Anything related to Optimus and Tesla's robotics vision.
With all that said, I don't actually think the upcoming report and earnings call will be anything special. A lot of this news has already been shared.
I would be quite surprised if Tesla's management provides much more detail or says anything materially different on Oct. 23 than what it shared during the Robotaxi event on Oct. 10. For this reason, I'm not holding my breath for any surprises -- positive or negative.
Image Source: Getty Images
How has Tesla stock performed following earnings reports?
The chart below illustrates the price action of Tesla stock across the past seven earnings periods. The dates of the earnings reports are denoted by the purple circles marked with the letter "E".
Data by YCharts.
It's obvious that Tesla stock tends to experience heightened volatility around the times of its earnings releases. On several occasions, shares surged significantly in advance of those reports, only to slump shortly after they arrived.
When in doubt, zoom out
Take a step back, though, and consider the returns of Tesla stock over various time periods.
| Metric | 1 Year | 3 Years | 5 Years | 10 Years | All Time |
|---|---|---|---|---|---|
| Tesla stock price return | (12.8%) | (18.9%) | 1,230% | 1,360% | 13,660% |
Data source: Ycharts.
Clearly, Tesla shareholders have been disappointed by the stock's results over the last few years. Macroeconomic forces such as lingering inflation and a high interest rate environment took a toll on the company's growth. However, the economy is showing signs of resiliency: Inflation has cooled to below 3%, the Federal Reserve is tapering interest rates, and the labor market remains fairly strong. I think these factors should bode well for Tesla in the near term.
In the long run, however, there's something much more important to note. Tesla stock has been a bona fide multibagger over the long term.
So, the question remains: Should you buy Tesla stock before its next earnings report? In my opinion, it doesn't really matter. There's a good chance the stock will see greater volatility as it has in prior earnings periods, but the more crucial point to remember is that attempting to time the market is a usually a losing proposition.
If you are a believer in Tesla's AI vision and feel the company is making the right moves to remain a leader in the auto industry, the stock could be worth adding to your portfolio, no matter where in the earnings calendar we are.