Növekedési részvény: Tesla (Angol hír)

The market often underestimates the volatility in Tesla (TSLA.US) share prices, especially during earnings season. Elon Musk could surprise the market with his upcoming Q2 report again considering new events in China since his Q1 report. Global shipping data also shows signs that supply chain disruptions are easing.

Prior to results

If history is any guide, Elon Musk will also surprise investors in some way this time around. It is hard enough to anticipate what the surprises will be though it is possible that the biggest surprise could come from the China front. Tesla's Shanghai mega-factory has been recovering since being shut down by coronavirus measures in the first quarter. depending on the market's views on the degree of recovery, it could trigger a big price move. Also, according to the latest data from the China Passenger Car Association (CPCA), the total volume of TSLA reached 32,165 units in May. It's still not quite up to its best days, but it's only 4% down from a year ago. At the same time, global shipping data also shows signs that supply chain disruptions are abating.

Even if the surprises are correctly anticipated, it is only the beginning. It is even more difficult to predict how the market will respond to tall tales, which may give us pause for thought. The market never seems to learn Musk's pick and often underestimates his price volatility, creating an opportunity for investors in options or other derivatives like CFDs to hedge or profit. The implied volatility of the options market for TSLA is around 60% to 63% for options expiring in January 2023. To put things in perspective, the implied volatility of the NASDAQ 100 Index is around 30%. So the market considers the volatility of TSLA to be only about x2 times higher than the NASDAQ 100 index. But in reality, TSLA stock prices fluctuated easily more than 10 times a day than QQQ.

Possible second quarter surprises

Several key cities in China, most notably Shanghai, have been in lockdown due to a resurgence of Covid cases earlier in the year. As a result, production at its Shanghai mega-factory was halted for 22 days (March 28-April 19). After the lockdown ended, TSLA has been restoring production from its factory. According to this report, its production in Shanghai recovered to 70% of its pre-closing production level as of May 23. From this date, we will have a big surprise during the publication of the report from the second to the close of the session on July 20.

We could consider that the surprise will be positive for two reasons. First of all, the latest data from the China Passenger Car Association ("CPAA"), the supply side has improved significantly since April, and the car production capacity according to the country will fully recover in the coming months. . You can see how miserable April is for TSLA in the chart below and see how May has almost fully recovered to the level of a year ago.

source: InsideEVs

Second, beyond China, there are also signs that global supply chain congestion is easing. Based on Drewry data shown in the chart below, the cost peaked at $10,000 in September 2021 and saw another, smaller increase in late 2021. The cost of shipping has continued to decline since then, indicating that the worst is over. Namely, the composite World Container Index declined 0.7% to $6,998 per 40-foot container (2 TEU) this week. To widen the view a bit more, when TSLA released its Q1 results in April, the composite World Container Index stood at $7,874. And the current level of $6,998 is about 12% lower.

source: Drewry

The market continued to underestimate the volatility of TSLA

As mentioned above, even if previous forecasts are correct, the market could still respond to such surprises in either direction. And this is where the options market can help investors. The purchase and holding of shares bets only on the price of the shares. But options give investors an additional possibility to control their risks and rewards: volatility. In addition, the possibility of corrections can also be used through the short trading of CFDs.

Since the market seems to be substantially underestimating the volatility of TSLA, it could be creating valuation “mistakes” in the options market. TSLA's share price saw a 24.6% high and low fluctuation after the release of its Q4 2021 report on January 26, and subsequently saw a similar 21.8% fluctuation on its report filing. of the first quarter of 2022 on April 20. Adding to the surprise in these reports, Elon Musk also has the ability to deliver (and cause) big price moves. His Twitter poll on whether or not he should downsize him in November 2021 serves as an example, recalling that it caused around 17% price volatility in one day.

Such fluctuations are easily up to 10x higher than the average daily fluctuations of the NASDAQ100 (US100), yet the implied volatility of the TSLA is only about 2x higher than the US100, as we will see below.

source: xStation

Tesla roundup in 2022 so far: The good, the bad and the ugly

In its first quarter Tesla smashes estimates, warns supply chain woes are far from over as it posted revenue of $18.76bn and $2.86 in earnings per share, up from its Q1 2021 results which were $0.93 per share. In May Tesla confirmed plans for the second plant in Shanghai, close to the current plant and with an annual capacity of 450,000 vehicles. Elon Musk reveals that the Tesla Cybertruck is sold out through 2027, while the Tesla Semi truck order process opens as the launch date approaches.

And so on, until a long etcetera that culminates in a 3:1 stock split and record sales of the “model Y” that accounts for 33% of new vehicles sold in the United States in 2022, without changing sales prices. of their cars.

On the ugly side, sales of Chinese-made Teslas in April fell sharply due to the Shanghai lockdown. Tesla delivered just 1,512 vehicles from the plant, down from 65,814 units in March. Tesla's production decline in China is trending deeper than Musk's forecast, data and internal memos showed. Production at Tesla's Shanghai factory is on track to fall by more than a third in the second quarter from the first three months of the year due to lockdowns in China. These caused deeper disruptions to production than Elon Musk had predicted. The US automaker aims to build more than 71,000 vehicles at its Shanghai plant in June.

Coupled with the 44,301 units it produced in April and May, according to data from the China Passenger Car Association (CPCA), that would add up to about 115,300 units in the second quarter. In the first three months of the year, Tesla Shanghai built 178,887 cars, according to the CPCA."

And the bad: Tesla bottoms at $623 as bulls reset expectations, a 50% drop from its all-time high at $1,243.49. The current headwinds are too difficult to ignore. The reality is that the current Shanghai lockdowns have been an epic disaster so far in the second quarter and Tesla is expected to see modest delivery softness with a slower growth trajectory in key China region just before facing the second half of the year.

These poor estimates made Elon Musk want to cut 10% of Tesla jobs. The CEO claimed on Twitter that he has a ""super bad feeling" about the economy." Tesla's supply chain issues are a primary concern, with Musk explaining that production has been hampered by raw material shortages and the closure of assembly lines in China.

Final considerations

Tesla has the potential to deliver a positive surprise during its second quarter earnings report. The main considerations are the recovery on the China front and signs that global supply chain disruptions are fading. For investors who do not want to bet on the direction of the surprises, but only on the magnitude of the surprises, they will have to wait for the report to be published during the night of July 20.

Technical analysis

Source: xStation. D1. Tesla stock recovers from the most recent bottom at $623 per share, since then, the price has developed a triangular process with resistance between $757.8 and $776.8 per share, which represents a recovery of the 25% from support. Despite having a drawdoin of 50% from ATH, the huge gap above $776.8 per share could be the key area if the next earnings report surprises the market positively.

Dario Garcia, EFA
XTB Spain