Trading Tesla stock around earnings is a coin toss, but long-term investors have better odds

Tesla’s post-earnings reaction can look like a trader’s dream — or a trap.

The stock has a habit of making outsized moves after results, but the historical record shows those short-term bets are close to a toss-up. For investors, the better roadmap has usually been patience.

That pattern shows up clearly in the data.

Since 2010, buying Tesla (TSLA) just before quarterly earnings and holding for only one day has produced a median return of -1%, with a win rate, which refers to the percentage of the time the return was positive, of 48%.

Stretch that holding period to a week or even a month, and the setup still looks like little better than break-even: the median return stays slightly negative after one week, turns flat after one month, and the win rate remains stuck around a coin toss at 46% to 49%.

The picture starts to improve once investors give the stock more time.

Over a one-quarter holding period, the median return rises to 2.4% and the win rate climbs to 60%. Over a full year, the median return jumps to 24%, with nearly three out of four trades ending higher.

That helps frame what traders were up against heading into this report. Tesla options were pricing in a post-earnings move of nearly 5%, which is bigger than Tesla’s average daily movement of 4% over the last quarter.

But that expected move was still well below the stock’s average post-earnings move of 11% over the last 10 reports — a reminder that Tesla’s first move after results can be far more violent than a normal session.

And the recent history does little to make that first-day trade look easier. Over Tesla’s last 10 earnings reactions, the stock has finished higher five times and lower five times. The average win was 9%, the average loss was also about 9%, and the overall average reaction was essentially flat.

In other words, Tesla has often delivered exactly the kind of post-earnings volatility traders crave, but not much of a reliable edge on direction.

That is what makes the longer holding periods more useful.

The payoff from buying Tesla before earnings and holding for a year has varied a lot over time, with the biggest gains clustered around the company’s explosive 2020 and 2021 run. That tailwind faded sharply in the years that followed, though the rolling trend has started to improve again.

That leaves Tesla investors with a sharper question than where the stock closes on Thursday: Are you trading the reaction, or buying yourself enough time to survive it?

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.

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