Tesla Motors (NASDAQ:TSLA) is expected to report earnings on Tuesday. The whisper number is 17 cents, 6 cents ahead of the analysts’ estimate. Whispers range from a low of 11 cents to a high of 20 cents. TSLA has a 60 percent positive surprise history (having topped the whisper in three of the five earnings reports for which we have data).
– Beat whisper: 3 qtrs
– Met whisper: 0 qtrs
– Missed whisper: 2 qtrs
Our primary focus is on post-earnings price movement. Knowing how likely a stock’s price will move following an earnings report can help you determine the best action to take (long or short). In other words, we look at what happens when the company beats or misses the whisper number expectation.
The table below indicates the average post-earnings price movement within a one and 30 trading day timeframe:
The strongest price movement of +6.3 percent comes within 20 trading days when the company reports earnings that beat the whisper number and -7.9 percent within five trading days when the company reports earnings that miss the whisper number. The overall average price move is “as expected” (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.
The table below indicates the most recent earnings reports and short-term price reaction:
Tesla has reported earnings ahead of the whisper number in one of the past four quarters with a whisper number. In the comparable quarter last year, the company did not have a whisper number. Last quarter, Tesla reported earnings 38 cents ahead of the whisper number. Following that report, the stock realized a 9.5 percent gain in 20 trading days. Overall historical data indicates the company to be (on average) an “as expected” price reactor when the company reports earnings.
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John Scherr is the founder and president of WhisperNumber.com, an independent financial research firm focused on earnings expectations. He is a regular contributor to CNBC and Fox Business Network, and has been featured in Barron’s, The Wall Street Journal, and MarketWatch. He is considered a leading expert on “whisper numbers” and post-earnings price movement analysis. WhisperNumber.com provides specific earnings trade alerts to take advantage of earnings report price movement with its Whisper Reactors subscription service.