Key Takeaways

Tesla recent delivery figures point to solid second quarter performance ahead.
The shares however have typically not surged following earnings releases in recent periods.
Its valuation level stays exceptionally elevated.
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The latest public share sale from Space Exploration Technologies known as SpaceX has offered Elon Musk supporters another investment choice since Tesla now shares attention with it. At a market capitalization near 1.5 trillion dollars Tesla sits clearly behind the rocket firm whose value exceeded 1.9 trillion dollars at the close of last week.

Tesla shares have declined nearly 10 percent year to date and a major examination arrives with its next earnings release. The second quarter figures arrive on July 22. Might they provide the lift the stock needs? Here is my outlook.

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The firm should report respectable expansion in revenue and profits

During its prior earnings release Tesla posted impressive expansion of 16 percent. The company cut prices to counter rivals and revenue reached 22.4 billion dollars in the opening quarter versus 19.3 billion dollars the prior year. Profits rose 17 percent yet trailed earlier periods.

Overall I anticipate a comparable pattern in the second quarter especially after Tesla posted better than anticipated delivery totals. Expansion should prove solid and exceed forecasts. Facing softer prior results the company could deliver strong profit figures too. The overall report may appear favorable.

Why Tesla shares could still decline

Over recent years Tesla stock has more often dropped after earnings than climbed sharply.

TSLA data by YCharts

The outcome depends not only on quarterly results but also on forward guidance. The situation grows complex now that SpaceX offers an alternative for enthusiasts. Should Tesla outlook appear less compelling which seems possible given its focus outside rockets or heavy artificial intelligence spending it could lose investor interest.

The muted reaction to recent delivery numbers may illustrate this point. That explains why even with decent Q2 figures the results may fail to excite buyers of a stock valued near 400 times trailing earnings.

Tesla remains overvalued so I would not be surprised if shares drop after the report since expectations appear elevated.

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David Jagielski CPA holds no stake in any mentioned securities. The Motley Fool maintains positions in and endorses Tesla. The Motley Fool maintains a disclosure policy.

The perspectives expressed here belong to the author and may not reflect those of Nasdaq Inc.