Tesla Stock Rises. Market Looks Ahead to Earnings With Optimism.

Coming into Wednesday trading, Tesla stock was up 6% year to date and up 95% over the past 12 months. (Getty Images)

Key Points

• Tesla stock increased by 1.3% to $434.66 in early trading, while the S&P 500 and Dow Jones Industrial Average rose by 1% and 0.8% respectively.
• Analysts project third-quarter earnings per share of 55 cents, a decrease from 72 cents in the third quarter of 2024, despite higher-than-expected vehicle deliveries.
• New, lower-priced versions of the Model 3 and Y are expected to help offset potential sales pressure from the loss of the $7,500 federal EV tax credit.

Tesla stock rose early Wednesday as investors prepared for the electric-vehicle maker’s third-quarter earnings, due in a week.

They will be looking for updates about the fourth quarter, sales of the new “Standard” Model 3 and Y trims, and what new models Tesla may offer in 2026 and beyond.

Shares of the Elon Musk-led company added 1.4% closing at $435.15, while the S&P 500 rose 0.4% and the Dow Jones Industrial Average finished just in the red.

Coming into Wednesday trading, Tesla stock was up 6% so far this year after a rally sent shares up 38% over the past three months. Strong stock performance like that can raise investor expectations ahead of any earnings report.

For the third quarter, analysts project earnings per share (EPS) of 55 cents, according to FactSet, down from 72 cents reported in the third quarter of 2024. There’s a good chance of a beat, though. Tesla delivered more cars than expected in the third quarter. It sold almost 500,000 vehicles. Wall Street was looking for closer to 445,000. It was a big “beat,” and EPS estimates have risen by about a nickel since then.

Investors might be thinking more about the fourth quarter on the third-quarter earnings call. U.S. car buyers just lost the $7,500 federal EV tax credit, which should pressure all EV sales in the coming months.

“The magnitude of the drop might not be as bad as feared,” wrote Deutsche Bank analyst Edison Yu in a recent report. New, lower-priced versions of the Model 3 and Y can help offset some of the weakness.

Wall Street currently projects roughly 450,000 deliveries for the fourth quarter.

Yu also noted that the “Standard” versions of the Model 3 and Y don’t really qualify as new vehicles, which start for about $5,000 less than some “Premium” versions. Still, they offer consumers extra choice. He is hopeful for an all-new form factor that analysts sometimes refer to as the Model Q or Model 2, which will launch in some geographies in 2026.

Yu rates shares Buy and has a $435 price target for the stock. Overall, 47% of analysts covering Tesla stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Tesla shares is about $367.

Write to Al Root at allen.root@dowjones.com