Will The Post Earnings Rally In Tesla Stock Continue?

by Trefis Team
Tesla Motors
Rate   |   votes   |   Share

Tesla stock (NASDAQ: TSLA) is up by 8% over the last week (five trading days) and currently trades at about $710 per share. The gains follow Tesla’s solid Q2 2021 results, which were driven by strong sales of the Model 3 and Model Y vehicles and rising margins. Investors also liked the fact that the company’s core automotive business turned a profit without relying on the sale of regulatory credits. Moreover, there are signs that the semiconductor shortage, which impacted production across the automotive industry, is easing and this could also help Tesla as it looks to scale up production in the coming quarters. Separately, major U.S.-listed Chinese EV players Li Auto and Xpeng published record delivery numbers for the month of July. Although Tesla doesn’t report Chinese deliveries or monthly numbers, the company is investing big in the Chinese market and the delivery growth posted by rivals indicates that EV demand in China remains hot.

So will Tesla stock continue to trend higher over the coming weeks and months, or is a correction looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for Tesla stock average 9% in the next month (21 trading days) period after experiencing an 8% rally over the last five trading days. The stock is also likely to outperform the S&P 500 over the next month, with an expected return that would be 8% higher compared to the S&P 500.

But how would these numbers change if you are interested in holding TSLA stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test TSLA stock chances of a rise after a fall and vice-versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF TSLA stock moved by -5% over 5 trading days, THEN over the next 21 trading days, TSLA stock moves an average of 4.5%, with a 55.6% probability of a positive return over this period

Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 2.5% compared to the S&P500 over the next 21 trading days, with a 50.9% percent probability of a positive excess return

Some Fun Scenarios, FAQs & Making Sense of TSLA Stock Movements:

Question 1: Is the average return for Tesla stock higher after a drop?


Consider two situations,

Case 1: Tesla stock drops by -5% or more in a week

Case 2: Tesla stock rises by 5% or more in a week

Is the average return for Tesla stock higher over the subsequent month after Case 1 or Case 2?

TSLA stock fares better after Case 2, with an average return of 4.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 8.7% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Tesla stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?


If you buy and hold Tesla stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For TSLA stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?


The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although TSLA stock appears to be an exception to this general observation.

TSLA’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Tesla stock by changing the inputs in the charts above.

Electric vehicles are the future of transportation, but picking the right EV manufacturer stocks can be tricky. Investing in Electric Vehicle Component Supplier Stocks can be a good alternative to play the growth in the EV market.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!