How Tesla Stock Is Trading ahead of Its Q1 2019 Results



Tesla’s first-quarter earnings

Tesla (TSLA) is scheduled to release its first-quarter earnings results after the market closes on April 24. After outperforming the broader market and its peers in the fourth quarter of 2018, Tesla stock turned negative in the first quarter of 2019.

In the fourth quarter of 2018, TSLA rose 25.7% compared to the 14.0% fall in the S&P 500 Index. In contrast, the stock fell 15.9% in the first quarter.

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Underperforming the broader market

On April 17, the broader market was trading on a slightly positive note, with a gain of ~2.3% seen in the S&P 500 benchmark so far in April. The stocks of mainstream automakers (XLY) General Motors (GM), Ford Motor Company (F), Fiat Chrysler Automobiles (FCAU), and Toyota Motor (TM) have outperformed the broader market in April so far. Month-to-date, GM, F, FCAU, and TM are up ~7.8%, 8.2%, 12.1%, and 5.1%, respectively.

In contrast, Tesla stock has fallen 3.1% this month, making it one of the worst-performing auto stocks in April so far. NIO, Tesla’s Chinese peer, has fallen nearly 10.0% in April so far.

Key reasons for pessimism

Uncertainty about the outcome of Tesla CEO Elon Musk’s legal battle with the Securities and Exchange Commission, media reports about declining Model 3 demand, and investors’ low expectations for the company’s upcoming earnings results could be the key drivers of the underperformance in Tesla stock.

In April so far, tech companies NVIDIA (NVDA), Intel (INTC), and Alphabet (GOOG) have risen 4.3%, 9.1%, and 5.4%, respectively, while Apple (AAPL) has risen 6.9%.


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