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Tesla Solid Q3 Earnings Put These ETFs in Focus

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After the closing bell on Wednesday, Tesla Motors (TSLA - Free Report) reported robust Q3 earnings, wherein it beat the estimates on both earnings and revenues. The electric carmaker posted record revenues and one of the strongest profit margins in the group's history.

Q3 Earnings in Focus

Adjusted earnings per share came in at $1.86, easily beating the Zacks Consensus Estimate of $1.39 and improving from the year-ago earnings of 76 cents. Revenues jumped 56.8% year over year to $13.76 billion and edged past the Zacks Consensus Estimate of $13.16 billion.

Earlier this month, Tesla reported another quarter of record deliveries, underscoring its strong growth amid the global automotive semiconductor shortage that is roiling car production across the globe.

The company delivered a record 241,300 (232,025 Model 3 and Y, and 9,275 Model S and X) vehicles. Deliveries were up 73% from the year-ago quarter and 20% from the prior quarter. This marked the sixth consecutive quarter-over-quarter gain. The electric carmaker produced 237,823 (228,882 Model 3 and Y, and 8,941 Model S and X) vehicles during the quarter (read: ETFs to Buy on Tesla Record Q3 Delivery Numbers).

In China, demand is still recovering and EV competition is coming from all angles. Tesla’s ability to navigate these challenges in the third quarter is impressive. With this, Tesla has sold around 627,300 vehicles so far this year and is on track to soundly beat last year's total of 499,550.

Tesla also reiterated its previous guidance to achieve 50% average annual growth in vehicle deliveries over a multi-year horizon. However, the electric carmaker warned that several challenges, including semiconductor shortages, congestion at ports and rolling blackouts, could impact production rates in the final quarter of the year, adding that volume growth will depend on the availability of other parts in the global supply chain.

Despite the solid Q2 results, shares of Tesla dropped around 1.6% in aftermarket trading on elevated volumes. Tesla currently has a Zacks Rank #1 (Strong Buy) and a Growth Score of B. It belongs to a bottom-ranked Zacks industry (in the bottom 26%).

ETFs to Buy

We have highlighted six ETFs having a double-digit allocation to this luxury carmaker that could be compelling picks to tap Tesla’s strength.

Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)

This is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology and then enhancing the concentrated exposure with options. It is heavily exposed to the Tesla stock and Tesla call options at 25% share. The fund seeks to boost its performance during extreme moves in Tesla, charging investors 0.95% in annual fees. It has accumulated $1.9 million in its asset base while trades in an average daily volume of 1,000 shares (read: Chip Crunch Hit US Auto Sales in Q3: ETFs, Stocks in Focus).

Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)

This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of $21.3 billion and an average daily volume of around 4.7 million shares. Holding 63 securities in its basket, Tesla takes the second spot with 16.6% of assets. The fund charges 12 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

ARK Industrial Innovation ETF (ARKQ - Free Report)

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 46 stocks, with TSLA occupying the top spot with an 11.3% share. The product has accumulated $2.5 billion in its asset base and charges 75 bps in fees per year. It trades in volume of 292,000 shares a day on average.

ARK Next Generation Internet ETF (ARKW - Free Report)

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 48 stocks in its basket with Tesla occupying the top position at 10%. The ETF has amassed $5.4 billion in its asset base and charges 79 bps in annual fees. It trades in an average daily volume of 650,000 shares (read: Here's Why Internet ETFs Are Sizzling With OpportunitiesHere's Why Internet ETFs Are Sizzling With Opportunities).

ARK Innovation ETF (ARKK - Free Report)

This is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 51 securities in its basket with Tesla occupying the top position, accounting for a 10% share. The product has gathered $20.8 billion in its asset base and charges 75 bps in fees per year from investors. It trades in a volume of 5.4 million shares per day on average.

MicroSectors FANG+ ETN (FNGS - Free Report)

This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket, with Tesla accounting for 10% share. The product has accumulated $78.5 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 32,000 shares and has a Zacks ETF Rank #3 (read: Investors Return to ETFs: 5 Hot Picks of Last Week).

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