Don’t Touch Tesla Stock Until After July 23

Electric vehicle manufacturer Tesla (NASDAQ:TSLA) is an unassailable juggernaut – or, maybe not. After Tesla stock’s recent rally, it might feel as if the company is invincible and the stock is unstoppable. However, that’s a dangerous mindset and an ill-considered Tesla investment could put your portfolio at risk.

Besides, there’s a key event coming up very soon that might set the tone for Tesla for the rest of the year. If you’re truly an informed investor, then you’ll want to have as much relevant data as possible. With Tesla, it’s better to wait a little longer than to make a hasty assessment you may regret later.

Tesla’s Big Day: Mark Your Calendar

Tesla stock embarked on a frenetic rally in late June and the first 10 calendar days of July. Possibly, the market just assumed that the automaker had raked in record-breaking revenue in 2024’s second quarter.

It’s risky for investors to make assumptions like that, because now Tesla has to justify its elevated share price. The perma-optimists are about to be put to the tests, as Tesla is set to release its Q2-2024 earnings results on July 23.

Ask yourself: Does it make sense to load up on Tesla stock after a big rally, right before a crucial earnings report? Unless you have a crystal ball, there’s no need to predict the outcome of Tesla’s imminent quarterly data release.

Just so you know, the analysts’ consensus estimate calls for Tesla to have earned 60 cents per share in Q2 of 2024. The company missed Wall Street’s consensus EPS forecasts for the three most recently released quarterly reports. So, it’s probably not wise to presume that Tesla will post a huge earnings beat this time around.

Is Tesla Stock a ‘Faith-Based Stock’ Now?

Clearly, as the big earnings event approaches, DataTrek Research co-founder Nicholas Colas isn’t ultra-optimistic about Tesla. Here’s a recent quote from Colas on this topic:

“This is clearly a faith-based stock now, not one whose valuations are in any way tied to current earnings power, and every day the stock rallies the bar for the event just gets higher.”

This might sound like a harsh assessment of Tesla. Consider the numbers, though. Again, Wall Street expects Tesla to have earned 60 cents per share in 2024’s second quarter. Even if the company earned a full dollar per share and then repeated that for four quarters, that would be full-year EPS of $4 on a $270-ish stock.

No matter how you slice it, Tesla’s trailing price-to-earnings (P/E) ratio will be quite high. Thus, when Colas raised a red flag about Tesla’s valuation versus the company’s “current earnings power,” he’s making a salient point.

And speaking of salient points, Tesla’s share of the U.S. EV market dropped below 50% in 2024’s second quarter. It’s the first time the company’s market share fell below 50% since Tesla started selling EVs, according to data provided by Cox Automotive (via Barron’s).

Not that Tesla’s market share is heading toward zero or anything like that. It’s just another sign, however, that Tesla isn’t invincible despite the enthusiasm of the perma-bulls.

Tesla Stock: Rely on Data, Not ‘Faith’

Colas is trying to warn investors about having too much “faith” in Tesla. His point is duly noted, as Tesla’s U.S. EV market share is slipping. Plus, Tesla’s share price seems to greatly outpace the automaker’s earnings.

Besides, investors don’t have all the relevant information right now. That’s because Tesla is about to release some crucial quarterly data in a matter of days.

Consequently, there’s no need to make a hasty trade with Tesla stock. It’s fine to just chill out, wait for more information and, in the meantime, exercise due caution.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.