What to expect from Tesla’s earnings report on Monday?

Tesla Inc. (NASDAQ: TSLA) is expected to announce its second quarter earnings report on Monday after market close. With the stock lagging from its record all-time highs in January, investors will be paying particularly close attention to the print for any bullish indications. On Monday, Piper Sandler’s Chief Market Technician Craig Johnson and Chad Morganlander, portfolio manager at Washington Crossing Advisors offered their take on CNBC’s “Trading Nation” on what to expect.

Tesla has been consolidating the past six months

Craig Johnson said that the stock has been “stuck in the mud,” and it has been trading in a descending triangle pattern. Johnson said the stock has been consolidating over the past six months and he offered some key technical levels to look out for.

According to Johnson, the key levels to watch include the break below the support level of $563, which could be an opening for the stock to drop and retest its November lows of $408. On the other hand, a move above $689 would have the potential for Tesla’s stock to retest the all-time closing highs of $883. He added:

“It’s really going to come down to the next catalyst, which is going to be earnings. This is a stock that our firm likes fundamentally. I think you got a real shot for this to break out of this triangle to the upside.”

TSLA stock is overvalued

Chad Morganlanders said that he is optimistic about the electric vehicle market over the next 5 to 15 years, but he feels Tesla is overvalued today. Morganlander said:

“Tesla’s a great company overall. When we look at Tesla’s valuation, we’re looking at a 10x revenue number for 2022. That’s very very high. P/E multiples are also really quite frothy. We would be avoiding it, or if you own it, we’d be scaling back our position.”

Tesla could miss earnings

Heading into Tesla’s print, the company continues to shed market share, especially in Europe, GLJ REsearch analyst Gordon Johnson said on CNBC’s “Worldwide Exchange.” Specifically, Tesla’s market share in the EV market has fallen from 33% at the end of 2019 to 15% today. The same is true in China where Tesla’s market share has fallen from 23% at the start of 2020 to 15% today.

The “significant” market share loss will be a key area of focus in the earnings release along with reports from May that Stellantis will no longer need to buy regulatory CO2 credits from Tesla. The analyst said these two factors make the case for a “potential miss” when the company reports after market close.