Tesla has earnings coming up after the closing bell on Wednesday!

What should investors pay attention to regarding Tesla?

The major negative catalyst this year has been the lowering of car prices across the board.

As a result, margins have dropped like a rock over the past few quarters!

If we look back a little over a year ago, gross margins were sitting at 25.09%…

As of the last earnings report back in June, margins dropped to 18.19%.

The part that has Wall Street really anxious is that they may not have bottomed out yet!

To add fuel to the fire, Tesla delivery numbers significantly underperformed analyst expectations a few weeks ago…

Why is this a big deal?

The original rationale that Elon Musk gave for the margin hit was that they were focused on sales in the short term.

This means that if sales-related metrics don’t perform on the level of Wall Street’s expectations, then the stock price is expected to take a hit!

The silver lining is that expectations from analysts have dropped since the delivery numbers came out.

The biggest X factor going into earnings is guidance…

The Cybertruck truck could be a big catalyst for the company in 2024!

The problem is that the release date keeps getting delayed by Tesla.

I expect that it will begin having an impact on the company’s bottom line by the second half of next year.

There’s also the autonomous driving component…

This one’s even more unpredictable than the Cybertruck, but arguably much more important for the long-term future of the company.

With all this in mind, I could see the stock maintaining bearish sentiment for the next 6-9 months and picking up towards the tail end of 2024…

Assuming one holds the same viewpoint, then it may make sense to look into multi-month put options.

Obviously the lower the strike price, the cheaper the contract will be…

Consequently, this also means that there is a lower likelihood of it expiring in the money!

That’s all for now…

Until Next Time,

-Damian