Should You Sell or Short Tesla After Its April 23, 2024 Earnings Report?

TL;DR

Tesla may face a pullback because its 12.3% after-hours surge followed promises about a cheaper Model 2 and robotaxis even though earnings and revenue missed expectations. The speaker opened a light 25-share short position at about $160 per share but wanted confirmation before becoming more aggressive. Read on to understand the earnings figures, proposed $25,000 EV, layoffs, and risks behind the bearish view.

Transcript

so Tesla reported earnings today and this is everything that you need to know about it what's going on guys it's Ricky with techb but Solutions also just wanted to be completely open with you guys I did open up a short position a few minutes ago I opened up 25 shares short so super light position it's about $4,000 I wanted to show you my average pu... Read More

Key Insights

• 😘 Tesla reported lower-than-expected earnings per share and revenue for the recent quarter.
• ⌛ The stock surged 12.3% after-hours due to investor excitement over Elon Musk's promises of a cheaper Model 2 EV and progress on Robo taxis.
• 👶 Concerns exist about the timeline and execution of these new offerings, based on Tesla's history of delays and unfulfilled announcements.
• 📣 The gap between Tesla's earnings report and its stock performance highlights the significant influence of Elon Musk's word and investor sentiment.
• ❓ Layoffs of nearly 10% of Tesla's workforce indicate potential challenges and slowdowns in the company.
• 🤨 Tesla's stock performance in 2024, with a significant decline, raises doubts about the sustainability of the recent surge.
• 🙊 The market's reaction to Tesla's earnings speaks to the importance of expectations and narratives surrounding the company.

Questions & Answers

Q: Why might investors want to sell or short Tesla after its April 23, 2024 earnings report?

The speaker believed Tesla was reaching overbought levels after gaining 12.3% in after-hours trading, despite missing both earnings and revenue expectations. He opened a light short position but said he was not convinced the rally, driven largely by new product promises, would hold.

Q: What earnings and revenue did Tesla report on April 23, 2024?

Tesla reported earnings per share of $0.45, below the expected $0.49. Revenue was $21.3 billion versus a forecast of $22.27 billion.

Q: Why did Tesla stock rise despite missing earnings expectations?

Investors responded positively to promises of a cheaper Tesla Model 2 potentially arriving as early as next year and continued work on robotaxis. According to the speaker, these announcements overshadowed the weaker-than-expected earnings and revenue.

Q: What short position did the speaker open in Tesla?

The speaker opened a short position of 25 shares at an average price of about $160 per share, representing roughly $4,000. He described it as a very light position because Tesla could still rise further.

Q: What price levels was the speaker watching before considering a larger Tesla short?

Tesla reached after-hours highs around $162, while the speaker saw possible additional upside toward the moving average near $171 to $172. He said he would consider a short position there if the stock was rejected and the rejection was confirmed.

Q: What did Elon Musk say about the cheaper Tesla Model 2?

The proposed Model 2 was described as Tesla's cheapest model, with a price around $25,000. Musk indicated that this cheaper EV lineup might become available as soon as early next year.

Q: Why did the speaker doubt Tesla's new product timeline?

He pointed to the Cybertruck, announced in 2019 but not released until 2024, as well as the still-unavailable Roadster, Optimus robot, and robotaxi. Based on that history, he did not consider an early-next-year Model 2 launch guaranteed.

Q: How did layoffs and Tesla's 2024 stock performance support the bearish case?

The transcript discusses nearly 2,700 employees being laid off, representing about 10% of Tesla's workforce, with at least 60 days' notice under the WARN Act. It also says Tesla was down 43% at its 2024 bottom, leading the speaker to expect further slowdowns or layoffs could return the stock to its previous bearish pattern.

Summary & Key Takeaways

• Tesla reported earnings with EPS of $0.45 per share, lower than the expected $0.49 per share, and revenue of $21.3 billion, missing the forecasted $22.27 billion.

• Despite the negative figures, Tesla's stock surged 12.3% after-hours due to investor optimism regarding the announcement of a cheaper Model 2 EV and progress on Robo taxis.

• The stock's rise is based on investors' trust in Elon Musk's promises, but some concerns remain about if and when these new offerings will become a reality.