Trading Tesla on Quarterly Results

It's not as easy as it seems: A look at the stock's reaction to earnings since Q4 2022

• Since Tesla started its price-cutting campaign in Q4 2022, its operating profit (or EBIT) has dropped by 48% to $7.07 billion in 2024, despite a near doubling of regulatory credits from $1.77 billion in 2022 to $3.38 billion last year (including US IRA subsidies).

• Including Q4 2022, Tesla missed EBIT estimates in 8 out of the past 9 quarters, but the stock rallied after 3 of those misses due to Musk’s “pumps” on the earnings call.

• The best examples are Q1 2024, Q4 2022, and Q4 2024, where steep earnings misses were ignored because of Musk’s bullish (and mostly deceitful) comments on the call (see details below).

• The Q1 2025 earnings report will be out on Tuesday, April 22, and investors have been notified that “Tesla management will hold a live company update”, which is a first for the carmaker and sounds like a bad omen given how badly Tesla is doing.

• Given how weak Tesla’s sales are, the bears may see the Q1 earnings event as a good opportunity to short the stock (it has fallen on an average by 9% the day after bad results in 5 of the past 9 quarters), but it should be noted that Musk is desperate these days and he could go into “overdrive” with his lies on the call.

• This report looks at both the fundamentals and the reaction in the stock price following Tesla’s quarterly results. It also begins the “Annals of a Carnival Barker” series of my coverage of Tesla and Musk.