Why did TSLA fall despite higher earnings estimates?

  • Tesla stock took a sharp turn after the earnings release.
  • TSLA shares quickly fell 6% despite higher earnings estimates.
  • Tesla then recovered to trade down 2% when buyers intervened.

Tesla (TSLA) swung quite wildly in the after-hours market on Wednesday after its earnings release. The stock fell 6% fairly quickly despite the up and down results. Buyers then went bargain hunting as the market struggled to grasp which metric to focus on. By the time things calmed down, we were almost back to where things started. At the time of writing, Tesla is back to $930 pre-market on Thursday, just $7 or less than 1% lower than where Tesla stock was trading at the close of the regular session. and before the drop in profits.

Tesla Stock News

Tesla beat earnings per share (EPS), to $2.54 from an average estimate of $2.26. Revenue also beat expectations, hitting $17.72 billion versus an estimate of $16.35 billion. This was a pretty solid performance beat on both the top and bottom lines. Margins also held up well, standing at 30.8% against an estimated 30%. So far, so good.

However, Tesla then mentioned that its factories were not at full capacity and it saw this continuing into 2022. Supply chain issues were to blame, and investors took a dim view of this. and sold the stock lower. However, buyers then stepped in when arguments about demand versus supply issues surfaced. The demand profile remains strong and Tesla is sticking to its strong demand outlook for the future. If it can resolve supply issues and with new factories coming on stream in Texas and Berlin, it may be able to generate more supply to meet demand. It is certainly better to have a problem meeting demand than to have a lack of demand. It’s a case of “if you build it, they will come” for Tesla going forward.

Tesla Stock Forecast

TSLA bottomed out at $879 after the release, but actually spent very little time there. This is interesting for us from a technical standpoint as it prints a higher low than Monday’s selloff and sets up the potential for a bottom formation. In the 4-hour chart below, we can see this price action in play. Monday’s lows at $855 are our near-term pivot. Above, things have a chance to turn bullish from a more medium-term perspective. Below and it’s at $813 to test the 200-day moving average.

Tesla chart, 4 o’clock

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Karen J. Nelson