Tesla is Friday's IBD Stock Of The Day as the EV giant ran towards an aggressive early entry just days before the company reports third-quarter earnings.
Investors should exercise caution buying Tesla stock, unless using an option, going into the stock market close Wednesday when all eyes will be on CEO Elon Musk and any details on robotaxi scaling, autonomy and vehicle sale projections.
Analysts have increased their earnings forecasts somewhat in October, but still expect another big decline vs. year-earlier numbers despite record EV deliveries after U.S. tax credits expired. The current consensus pegs third-quarter EPS falling 24% to 55 cents vs. 72 cents in Q3 2024, according to FactSet. Revenue should climb about 4.6% to $26.33 billion.
Tesla reported in early October that it delivered 497,099 vehicles in Q3, topping the prior all-time high of 495,570 in Q4 2024, buoyed by the now-expired $7,500 U.S. EV tax credit. Those booming sales also slashed EV inventories, which should be good for margins.
Barclays analyst Dan Levy on Thursday raised his Tesla price target to 350 from 275 and kept an equal weight rating. Levy wrote that Tesla enters Q3 earnings with two contrasting "stories." Those narratives are autonomous driving and AI, coupled with CEO Musk's proposed compensation package, along with a "weakening fundamental backdrop."
Barclays expects a Q3 EPS beat, supported by gross margin and volume strength, but is "leaning neutral to slightly negative" into the print following a recent rally given its "muted view" on fundamentals going forward.
Tesla Stock Performance
Amid the current whipsaw stock market and with third-quarter earnings due next week, TSLA advanced 2.5% to 439.31 during Friday's stock market after falling 1.5% to 428.75 on Thursday.
Shares briefly topped Wednesday's high of 440.51, which could offer a specific entry on a steep downward-sloping trendline for aggressive investors, according to MarketSurge charts. However, the current volatile stock market and upcoming earnings raise the risks.
Investors could try an earnings options strategy to limit risk.
Tesla stock ended Friday's stock market up 6.2% on the week, based primarily on a strong move Monday where it regained its 21-day exponential moving average.
TSLA now has a 13%-deep handle with a 470.75 buy point on a very deep base going back to late December. The handle has had some big, high-volume tumbles, but is starting to tighten up.
Tesla stock, an S&P 500 component, is on the IBD Leaderboard watchlist.
BNP Paribas analyst James Picariello on Thursday initiated coverage of Tesla stock with underperform rating and a 307 price target. Picariello noted that Tesla's robotaxi and Optimus humanoid robot businesses "generate zero sales today, yet inform" around 75% "of our $1.02 trillion price target."
The firm, however, "takes an optimistic view toward both the robotaxi & Optimus businesses," Picariello said, but he added that the S&P 500 stock's "unfavorable risk/reward is clear."
BNP Paribas bases its target on an estimated robotaxi fleet of 525,000 by 2030 with 17 million cumulative Optimus deliveries by 2040, for $20,000 per unit. Picariello also estimates more than 11 million active full self-driving, or FSD, subscriptions by 2030.
Investors can keep tabs on the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
Tesla stock has a 77 Composite Rating out of a best-possible 99. The S&P 500 stock also has a 90 Relative Strength Rating and a 54 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
YOU MAY ALSO LIKE:
Get Full Access To IBD Stock Lists And Ratings
Why This IBD Tool Simplifies The Search For Top Stocks
IBD Digital: Unlock IBD's Premium Lists, Tools And Analysis Today
How To Invest: Rules For When To Buy And Sell In Bull And Bear Markets
Why This Market Is So Dangerous; Tesla, GE, CPI Inflation Data Due
