Tesla (TSLA) shares have wavered in recent sessions as investors turn their attention to the company's upcoming earnings report, due Oct. 21. Analysts expect the results to show a slight year-over-year revenue decline despite better-than-expected vehicle deliveries, while the options market points to the possibility of a post-earnings jump.

TSLA closed at $375.23 on Tuesday, Oct. 13, declining 0.74%, according to StockAnalysis. The shares have remained below recent resistance near $386–$389 after several sessions of uneven trading. Meanwhile, options traders have positioned for volatility surrounding the announcement, although available derivatives data has not established a clear bullish direction.

Q3 Earnings Test

TSLA will be in the spotlight when Tesla releases its financial results on Wednesday next week. The numbers will provide further detail on a business whose growth trajectory has become a central question for the market.

Analysts expect the report to show that revenue slipped slightly from the same period last year. The anticipated decline reflects the dynamics of the prior year, when the Trump administration ended the $7,500 EV tax credit and consumers rushed to buy Tesla vehicles to take advantage of the incentive before it expired.

Even so, Tesla's most recent delivery figures were solid. The company delivered 486,532 vehicles in the third quarter, after delivering 464,391 in the previous quarter — an increase of more than 22,000 units.

Deliveries are also benefiting from the ongoing US-Iran and Saudi Arabia-Houth crises, which have pushed oil prices higher. Brent and West Texas Intermediate (WTI) crude rose to $107 and $95, respectively. As a result, average gasoline and diesel prices have jumped to $4.34 and $6.27, respectively. That trend, combined with the efficiency of Tesla's vehicles, is likely to drive more consumers toward EVs — a shift already underway in the US and Europe.

The average analyst estimate is that Tesla's revenue fell 0.03% in the third quarter to $28 billion. The most optimistic forecast calls for revenue of $30.5 billion, a figure supported by higher vehicle prices and the company's energy business.

AI Investments and Free Cash Flow in Focus

The main catalyst for the stock will be Tesla's spending plans. In its last quarterly release, the company said free cash flow turned negative during the quarter as it continued to ramp up AI investments. Most of that spending is going toward Terafab, its giant project in Texas. The pace of that AI spending — and whether free cash flow remains under pressure — will be among the key data points in the upcoming release.

Options positioning suggests traders expect the stock to jump after earnings. Based on volume, options expiring next Friday carry a put/call ratio of 0.44, according to Barchart data. Since the results are due the Wednesday before that expiry, the contracts span the earnings event itself. Based on open interest, the ratio stands at 0.36. Both readings indicate more calls than puts.

Digging deeper into the options chain, calls are concentrated at the $380 strike, followed by $390, implying upside potential of about 4.4% from current levels. Puts, on the other hand, are concentrated at $375, where the stock trades today. Many analysts are bullish on Tesla, with the average price target among 46 of them standing at $412 — roughly 10% above Tuesday's close.

Technical Analysis

The daily chart shows TSLA has moved sideways over the past few days, trading near $375 — a few points below the important resistance level at $386, which marked its highest points on September 3 and 24.

The stock has remained above the Major S/R pivot point of the Murrey Math Lines tool and has climbed above the 50-day Exponential Moving Average (EMA), which is a bullish sign.

As a result, the shares are positioned for a strong bullish breakout once the ongoing compression phase ends. If that occurs, TSLA may jump to $406, the Strong, Pivot, Reverse level of the Murrey Math Lines tool.

This article is for informational purposes only and does not constitute financial or investment advice.

This article was originally published by The Market Periodical.