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Is Tesla Stock A Buy Before Its Q3 Earnings?

Posted By: ndeeney
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Tesla (NASDAQ:TSLA) is expected to release its earnings on Wednesday, October 22, 2025. Analysts anticipate a decline in earnings to approximately $0.52 per share, down from $0.72 during the same period last year, according to consensus estimates, while revenues are projected to slightly increase to $25.41 billion. Recently, the company reported better than anticipated Q3 delivery figures, with total shipments rising 7% year-over-year to 462,890 vehicles, partially fueled by a surge in EV purchases in the U.S. before the federal tax credit expired in late September. Nonetheless, Tesla is encountering ongoing difficulties in Europe, where opposition to CEO Elon Musk’s political views and increasing competition from BMW, Volkswagen, and China’s BYD have affected its sales.

The company currently has a market capitalization of $1.4 trillion. Revenue over the past twelve months amounted to $93 billion, and it reported operational profitability with $5.8 billion in operating profits and a net income of $6.1 billion. Although much will rely on how results compare to consensus and expectations, recognizing historical trends could potentially tilt the odds in your favor if you are a trader focused on events.

There are two approaches to this: comprehend the historical chances and position yourself prior to the earnings announcement, or analyze the correlation between immediate and medium-term returns post-earnings and adjust your position accordingly after the earnings are released. That being said, if you are looking for upside with less volatility than individual stocks, the Trefis High Quality Portfolio offers a viable alternative – having surpassed the S&P 500 and yielded returns exceeding 91% since its inception.

View earnings reaction history of all stocks

Tesla’s Historical Chances of Positive Post-Earnings Return

Here are some insights on one-day (1D) post-earnings returns:

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  • There are 19 earnings data points documented over the last five years, with 12 positive and 7 negative one-day (1D) returns recorded. In summary, positive 1D returns were observed approximately 63% of the time.
  • However, this percentage drops to 55% when considering data for the last 3 years instead of 5.
  • The median of the 12 positive returns is 4.2%, while the median of the 7 negative returns is -6.1%

Additional data for observed 5-Day (5D) and 21-Day (21D) returns following earnings is summarized along with the statistics in the table below.

Correlation Between 1D, 5D, and 21D Historical Returns

A comparatively less risky strategy (though it may be ineffective if the correlation is weak) involves understanding the relationship between short-term and medium-term returns following earnings, identifying a pair that demonstrates the highest correlation, and executing the suitable trade. For instance, if 1D and 5D exhibit the strongest correlation, a trader may choose to position themselves “long” for the following 5 days if the 1D post-earnings return is positive. Below is some correlation data derived from a 5-year and a 3-year (more recent) history. Please note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and subsequent 5D returns.

Discover more about the Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of all three, the S&P 500, S&P mid-cap, and Russell 2000), delivering strong returns for investors. Additionally, if you are looking for upside with a more stable ride than an individual stock like Tesla, consider the High Quality Portfolio, which has outperformed the S&P and achieved returns exceeding 91% since its inception. Why is that? Collectively, HQ Portfolio stocks have provided superior returns with lower risk compared to the benchmark index; less of a roller-coaster experience, as highlighted in HQ Portfolio performance metrics.