Second-quarter earnings season is ramping up with the third week of July slated to bring some high-profile reports, including one from Elon Musk’s Tesla, Inc. (TSLA). The electric vehicle giant is scheduled to deliver its latest batch of quarterly results on Wednesday, July 22, after the close of U.S. markets.
Earnings reports are often opportune times for short-term traders to consider inverse and leveraged ETFs. When it comes to Tesla, the Direxion Daily TSLA Bull 2X Shares (TSLL ) and the Direxion Daily TSLA Bear 1X Shares (TSLS ) are the funds to evaluate. TSLL attempts to deliver 200% of the daily performance of the widely followed automotive stock. Conversely, TSLS targets the daily inverse performance of Tesla shares, offering a tactical tool for bearish traders.
With solid second-quarter deliveries already priced into Tesla stock, traders are looking ahead to other catalysts, such as free cash flow.
“We will pay close attention to Tesla’s free cash flow metrics as the company begins a heavy capital expenditure investment cycle to build the infrastructure required for its real-world artificial intelligence products,” noted Morningstar’s Seth Goldstein.
More Catalysts to Consider
Other variables that could jolt either TSLL or TSLS — assuming they’re included in Tesla’s post-earnings commentary — are robotaxi rollouts and updates on the Optimus robotics endeavor.
“We will also be watching for an update on Tesla’s robotaxi rollout plans. We will look to hear management’s expansion plans, as well as an update on the robotaxi-dedicated Cybercab, which entered production,” said Goldstein.
Optimus is one subject that legitimately has the potential to put either TSLL or TSLS into play. Investor interest in humanoid robotics is surging, especially now as China accelerates its robot production beyond previous expectations.
“We view the project as a large long-term growth driver for Tesla, as it could eventually perform many tasks and be purchased by both businesses and consumers,” observed Goldstein.
Comments on profit margins and updates on cheaper Tesla models could also spark big moves in TSLL and TSLS post-earnings.
“As Tesla ramps up production of its new, lower-priced Model Y and Model 3 vehicles, we expect automotive gross margins, excluding credits, to be in the high teens, slightly below management’s long-term goal of 20%,” concluded Goldstein. “In the long term, we assume Tesla will deliver around 2.8 million vehicles per year by 2030, driven by the adoption of full self-driving software and the more affordable versions of the Model Y and Model 3.”
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