Tesla Struggles with Profitability and Rising Competition


Tesla’s Q4 earnings per share are projected at 73 cents, a 38% decrease year-on-year. This decline in profitability is concerning for investors, particularly as Tesla has been surpassed by Warren Buffet backed Chinese EV maker BYD, as the world’s leading electric vehicle manufacturer. 

Tesla’s stock has fallen 14.6% since the start of the year, the worst among the ‘Magnificent Seven’, after being locked in a vicious price war to boost sales; cutting prices for their flagship models – sacrificing profitability to boost demand in the face of competition across the EV sector.


Chart highlighting Tesla’s growth in the trailing twelve months followed by their ~15% decline in the New Year.


But Tesla is about more than just cars. It is also a leader in energy generation and storage, which are harder for investors to readily understand and could well provide surprise upside momentum to the stock.   

Even earnings in line with expectations may result in disappointment and significant downside for investors that are used to better-than-expected results from the Magnificent Seven; so investors that think the stock could move sharply in either direction around its earnings announcement may wish to consider a short-dated strangle to profit from this.  

Long Strangle

buy BUY 3 26-JAN-2024 220 CALL @ 3.40
buy BUY 3 26-JAN-2024 200 PUT @ 2.90

Trade Idea


Long Strangle

TSLA Shares @ $212

Total Outlay: $1890

$630 per 1 lot

(100 shares underlying per contract)

Breakeven: 193.7 (200-6.30) or 226.3 (220+6.3)

A 12.6% change in price of the underlying as we observed in Q3 earnings – in either direction, would return a $3723.6 profit on the initial outlay of $1890.

PROFIT of $1241.2 profit per 1 lot

Max loss: Price paid for the Strangle ($630 per 1 lot).

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